I beg to move,
That this House
believes that a commission of inquiry should be established to investigate the impact of the Government’s welfare reforms on the incidence of poverty.
I am very grateful to the Backbench Business Committee for giving the House the opportunity to debate this issue, which has been seriously neglected over the past three years. I am pleased to move the motion, which appears in my name and the names of Members from other parties.
It is clear that something terrible is happening across the face of Britain. We are seeing the return of absolute poverty, which has not existed in this country since the Victorian age, more than a century ago. Absolute poverty is when people do not have the money to pay for even their most basic needs. The evidence of that is all around us. There are at least 345 food banks and, according to the Trussell Trust, emergency food aid was given to 350,000 households for at least three days in the last year. The Red Cross is setting up centres to help the destitute, just as it does in developing countries. A study that was published two months ago shows that even in prosperous areas of the country, such as London, more than a quarter of the population is living in poverty. This point is really scary: according to the Joseph Rowntree Foundation, for the first time, the number of people in working families who are living in poverty, at 6.7 million, is greater than the number of people in workless and retired families who are living in poverty, at 6.3 million.
The Department for Work and Pensions published new data two months ago—it was pretty reluctant to do this, and one can see why—showing that the use of sanctions, which means depriving people of all their benefits for several weeks at a time, had increased by 126% since 2010 and, most strikingly of all, that 120 disabled people who had been receiving jobseeker’s allowance had been given a three-year fixed duration sanction in the previous year. Figures from the Department for Communities and Local Government—these are the last that I will quote, although there are many more that I could quote—show that there are now more than 2,000 families who have been placed in emergency bed-and-breakfast accommodation after losing their homes. The 5% rise in the overall homelessness figures last year included nearly 9,000 families with children, which is the equivalent of one family losing their home every 15 minutes.
What impact have the so-called welfare reforms, which would more accurately be described as social security knock-backs, had on the families who have been affected? The best evidence comes from the Northern Housing Consortium, which carried out a survey three months ago of a representative sample of people living in social housing. It found that a third of families spent less than £20 a week on food and that the average spend on food per person per day was precisely £2.10. That is a third less than those families were able to afford three months before that. The proportion of households that had to make debt repayments of more than £40 a week had doubled and the average level of debt was £2,250. That might not sound a lot to us, but to people with that standard of living, it is an enormous and daunting sum. A third of families had council tax debt, and households were having to spend 16% more on gas and electricity. Those are deplorable figures of profound impoverishment in an economy that is still the sixth largest in the world.
I congratulate my right hon. Friend on securing this incredibly important debate. Does he also recognise the impact of 2.7 million people losing out through the Government’s changes to council tax benefit, many of them disabled people, veterans and some of the most vulnerable in our communities?
I have already made slight reference to that, but my hon. Friend is entirely right. The change is quite small, but its impact can push very poor families into deep poverty.
What are the causes of the emergence of absolute poverty? The biggest cause is the huge rise in sanctioning: depriving someone of all their benefit entitlement for a month in the first instance, for three months in the second instance and, on a third infringement, for three years!
I am grateful to the right hon. Gentleman for giving way. Does he not agree that it is vital that those who are not looking for work are made to realise that there will be consequences to those actions, particularly at a time when 1 million people have been able to come into this country from eastern Europe and find work here?
Those who come to this country are more likely to be employed and take out less in benefits than many of the indigenous population. The real point is that these people want work—of course the hon. Gentleman is right that people should get work if they can, but there are 2.5 million people who have been unemployed for the best part of two years, and there are 562,000 vacancies—I checked that figure today—so four out of five of those who are unemployed simply cannot get a job whatever they do.
David T. C. Davies does not seem to realise that many of the people who claim benefits, including jobseeker’s allowance, are people who work. I have a constituent on a very low income. He delivers newspapers to my constituency office. He has dyslexia, but he works because he wants the pride of keeping himself. He still needs to claim JSA, but he lost his allowance because his dyslexia meant that in one fortnightly period he applied for nine jobs, not 10. Can that possibly be right, when this man is already working and trying to pay his way?
My hon. Friend is entirely right. I have already made the point that the greatest number of people in poverty are actually in working families. That is a real indictment of economic and social policy.
The sanctions are very harsh. I accept that there must be some sanctions, but the scale is out of all proportion and remarkably harsh. They are often applied for trivial reasons, such as turning up five minutes late for a job interview or a Work programme. Of course, people should not turn up five minutes late, but to deny them benefits for a whole month for that reason is totally disproportionate. There are other examples from my own experience in my surgery or from Citizens Advice interviews. I will quote, very quickly, just a few of them:
“The jobcentre didn’t record that I had informed them that I was in hospital when I was due to attend an appointment and I was sanctioned.”
“I went to a job interview instead of signing on at the jobcentre because the appointments clashed.”
Presumably, that was the right thing to do, but he was still sanctioned.
“I had to look after my mum who was severely disabled and very ill, but I was still sanctioned.”
“I didn’t know about the interview because they sent the letter to my previous address. I’d told them my new address but I was still sanctioned.”
“I was refused a job because I was in a women’s refuge, fleeing domestic violence and in the process of relocating, but I was still sanctioned.”
This is a classic:
“I didn’t do enough to find work in between finding work and starting the job.”
The latest DWP figures are from two months ago—it would be handy if we had more up-to-date figures—and show no less than 580,000 persons sanctioned in the eight months to June last year. If the same rate has continued since then—it has probably increased—that means that more than 1 million have been sanctioned in the past 15 months and deprived of all benefit and all income. Given that the penalties are out of all proportion to the triviality of many of the infringements, and given that, as I have said, four out of five people cannot get a job whatever they do, the use of sanctioning on this scale, with the result of utter destitution, is—one struggles for words—brutalising and profoundly unjust.
There are other reasons for this deeply worrying rise in absolute poverty. One is the delays in benefit payments, which have increased substantially—the delays, not the benefit payments, unfortunately. Another reason is the impossibility for many poor and vulnerable people to comply with the new rules, even though they want to, that are being imposed. I will quote just one case from my surgery a few weeks ago. He is a disabled man who had his benefits reduced due to the one-year employment and support allowance rule, so his income is now £71 a week. He has been left in a three-bedroom house because his mother and other people looking after him have died and so has to pay £23 in bedroom tax, plus £6 a week—this is the point that my hon. Friend Andy Sawford was making—in council tax due to the new council tax rules, leaving him with £42 a week. He asked to downsize to a smaller property, which is what the Government would expect him to do, but the local housing association, ironically called First Choice Homes, demanded that he pay two weeks’ full rent upfront, £197, before getting any housing benefit. He cannot do that, of course, and he is stuck in an impossible situation.
Another reason for the rise in absolute poverty is the impact of the bedroom tax, which applies to two thirds of a million households. I think everyone, probably even Government Members, will admit that it is Dickensian in its sheer social divisiveness. The housing benefit cap has now been imposed on a further 33,000 households. Both of those measures have forced tens of thousands of people out of their homes—we need to take into consideration what that means—even though two thirds of those affected by the bedroom tax are disabled. It is reckoned that more than 90% do not have smaller social housing to move into.
Another not insignificant cause of destitution—I will be very brief on this—is mistakes made by the authorities themselves. Last week, one of my constituents who had been sanctioned for a month was suddenly told that his sanction had been extended to a year. It was only intervention with the local DWP office that uncovered that it was actually their mistake. What happens for others who do not have the advantage of such an intervention? It now seems that up to 40,000 working-age tenants in social housing have been improperly subjected to the bedroom tax because of DWP error.
I will cite just one more reason for the unnecessary and cruel imposition of poverty, and I say that advisedly: the way in which tens of thousands of severely disabled persons have been judged by Atos, the French IT company, as fit for work—and therefore forced on to JSA at just £71 a week—when they are patently unfit for work. Very often, their GP has not been consulted to inquire whether there are other factors that need to be taken into account. The Chancellor’s policy of keeping 2.5 million people unemployed makes it impossible for them to find work, even if there were employers who would be willing to take them, and the 40% success rate of appeals shows how unfair the whole process is.
I conclude by asking just one simple question: is all this brutality towards the poor really necessary? Is there any justification in intensifying the misery, as the Chancellor clearly intends, by winding up the social fund and, particularly, by imposing another £25 billion of cuts in the next Parliament, half of that from working-age benefits? The whole objective of the massive cuts programme—to reduce the deficit—is one that I think we would all support. There is no disagreement about that across the House, yet after £80 billion of public spending cuts, with about £23 billion of cuts in this Parliament so far, the deficit has been reduced only at a glacial pace, from £118 billion in 2011 to £115 billion in 2012 and £111 billion in 2013. Frankly, the Chancellor is like one of those first world war generals who urged his men forward, over the top, in order to recover 300 yards of bombed-out ground, but lost 20,000 men in the process. How can it be justified to carry on imposing abject and unnecessary destitution on such a huge scale when the benefits in terms of deficit reduction are so small as to be almost derisory?
Does my right hon. Friend agree that the Government might save a lot more if they showed the same energy and enthusiasm for getting those who evade their taxes and run to tax havens as they do for going after the poor, the sick and people on the dole?
I will come to that in just a moment.
People say that to carry on doing the same thing over and over again, but expecting a different result, is the first sign of insanity. The Chancellor is not insane, of course, but he is deeply punitive and sectarian. Frankly, I want to help him. There is another way.
The thrust of what those on our Front Bench have said, as the shadow Chancellor has made clear on many occasions, is that we need public investment. We need to get jobs and growth. That is the alternative way: public investment in jobs, industry, infrastructure and exports to grow the real economy, not the financial froth, because that would cut the deficit far faster—that is the key point—than the Chancellor’s beloved austerity.
If the Chancellor is obsessed with fiscal consolidation, as I think he is, how about the ultra-rich—Britain’s 1,000 richest citizens—contributing just a bit? Their current remuneration—I am talking about a fraction of the top 1%—is £86,000 a week, which is 185 times the average wage. They received a windfall of more than £2,000 a week from the 5% cut in the higher rate of income tax, and their wealth was recently estimated by The Sunday Times—not The Guardian, but The Sunday Times—at nearly half a trillion pounds. Let us remember that we are talking about 1,000 people. Their asset gains since the 2009 crash have been calculated by the same source at about £190 billion.
My question, therefore, is: does the Chancellor believe that these persons, loaded with the riches of Midas, might perhaps be prevailed upon to contribute a minute fraction of their wealth in an acute national emergency, when one sixth of the work force earns less than the living wage and when 1 million people who cannot get a job are being deprived of all income by sanctioning and thereby being left utterly destitute? This is just a thought: charging the ultra-rich’s asset gains since 2009 to capital gains tax would raise more than the £25 billion that the Chancellor purports to need. I submit that it would introduce some semblance of democracy and social justice in this country if the Chancellor paid attention to this debate and thought deeply about what he is doing to our country and its people.
Members of the shadow Cabinet might need a boxing referee to sort out their disputes at the moment, as we read today in the Daily Mail, but I can assure hon. Members that I believe that the Conservative party is absolutely united in supporting the coalition Government and coalition Ministers in what they are trying to achieve. We do so against the backdrop of one of the most disastrous economic situations that this country has faced outside of a war.
It is worth reminding ourselves just what we were looking at in 2010. We took office with a deficit of £160 billion and a debt that was rising rapidly to £1 trillion. That was after years of overspending in good times, as well as in bad, by Labour, a cheap money supply and lax banking regulation under the former Government. We had disastrous economic decisions, such as that to sell gold at a fraction of its real rate. Worst of all and most seriously—this is what we are dealing with today—we had a welfare system that allowed people to get into a trap of welfare dependency, leaving them on the dole for many years, but at the same time filling the consequent gap in employment by allowing mass and uncontrolled immigration into this country, which completely undercut British workers.
That was the disastrous legacy that this coalition Government faced in 2010. I am proud of the fact that, instead of shirking their responsibilities, Ministers in this coalition Government took difficult economic decisions. Of course we had to make cuts and reduce public spending. It would have been grossly irresponsible not to do so, and in the longer term it would have led to far greater poverty than we face now. The reality is that we are a nation in debt. We are having to borrow about £10 billion every month. We are also having to roll over existing debts that previous Governments left us. If for any reason the international money lending organisations that give us that £10 billion a month ever decided that we were not in a position to pay either the interest or the original sum, they would simply stop lending to us, and there would be no European bank or International Monetary Fund waiting to bail us out with the sums we would need.
We would face an economic catastrophe on a far greater scale than the one we face now, and it would lead to real poverty. Indeed, it could lead to even third-world levels of poverty, because we would simply run out of cash. That is the catastrophe that keeps me awake at night—far more so than the bogus claims about global warming, when we have seen no rise in temperature for 16 years, or than terrorism, which is a much more serious matter but which the security services have thus far been able to contain.
Will the hon. Gentleman not acknowledge the truth that the amount spent on welfare by the last Labour Government decreased over time because we were effective in creating more jobs and getting people off welfare and into work? The national debt was some £800 billion when his party came to power, but is it not now well over £1 trillion and rising?
Indeed, the hon. Gentleman is quite correct in his last point. He makes an important point, but I would like to find out where it was going. Is he suggesting that we are not doing enough to pay down the national debt? Is he suggesting that we should cut further and faster? If so, and if we had the support of other Opposition Members, that is exactly what the Government could do and, indeed, possibly should do. I look forward to seeing that support for getting the deficit down.
The point I am making is simply that the Labour Government reduced the amount that taxpayers had to spend on welfare because we were effective at investing in the economy, creating jobs and thereby getting people off welfare and into work.
I do not accept that point, but I do accept that when the last Labour Government came into office in 1997, they spent the first couple of years paying down the national debt, which is exactly what they should have done.
No, from 2001 onwards they started overspending by an average of about £30 billion. That is an absolute fact; I have checked the figures on the national debt very carefully. From 2001 onwards, they started overspending by an average of about £30 billion a year. That is a fact. I can tell hon. Members that I have checked the figures on the national debt very carefully. As I say, from about 2001 onwards, the Labour Government decided to start overspending by approximately £30 billion a year, and they were overspending long before the financial crash happened in 2008—a crash that they, incidentally, had helped to cause.
Ministers in the coalition Government are absolute right to make cuts, and if Labour Members feel that the deficit is still too high and that further cuts should be made, I am sure we would all welcome their support. The Government are right to do this for another reason: the welfare system, which we are reforming, traps people in worklessness. Many members of my family— through marriage—are from eastern Europe, and some of them came to this country barely able to speak English and had no qualifications that would be recognised here. They were, however, able to get into work. They started in low-paid jobs and worked their way up.
I spent many years in low-paid jobs, and I am not talking about holiday jobs or a gap year, as I never even went to university. I happened to believe that, rather than wait around for whatever job people think they deserve, they should take any job available to them and use work to get better work. That is the way forward, and that is what the Government are trying to encourage through the use of sanctions and, frankly, through making it difficult for people to sit around watching the television all day. I am not suggesting that that applies to everyone who is out of work or even a majority of them, but it certainly applies to a percentage of people who are out of work. It is high time that it was tackled and stopped. I am glad that some people have the courage to do that.
We hear nothing from Labour Members except a mass of contradictions. They say that they want to be tough on welfare—tougher than the Tories, as the shadow Work and Pensions Secretary said in October 2013—and then to a different audience they complain about every single cut to the welfare budget. They complain that the Government are making cuts and then they complain, as Mr Meacher did, that the deficit is too high. It is ludicrous. They say that they are against the bedroom tax, but they brought the bedroom tax in, albeit in the private sector. What they say is a mass of contractions, so I cannot understand how anyone could feel that Labour Members were fit to be put in charge of welfare benefits or indeed the economy ever again.
My hon. Friend makes a good point. I believe we would all like to see some consistency from the Opposition—both on the economy and on what they are really planning to do to benefits. In the meantime, let me commend both the Liberal Democrat and Conservative Front-Bench teams, who have been prepared to put aside their personal poll ratings—frankly, these are unpopular decisions—and do what is right for this country rather than what is right for winning elections: namely, getting the deficit down and solving the long-term problem of worklessness. That will do far more to tackle poverty than anything we hear from Labour Members tonight.
Ministers—and certainly some Tory Back Benchers, as we have just heard—are in a state of denial about the increasing poverty in this country resulting from Government policies. They want us to believe—David T. C. Davies is as good an example as any—that we are dealing with the work-shy and scroungers, with people who have no justification for receiving benefits in the first place. It is to a large extent a repeat of what I witnessed during the Thatcher years. My right hon. Friend Mr Meacher, whom I congratulate on initiating this motion, will recall how we repeatedly used to point out what was happening in the country at large under Thatcher—increasing poverty and deprivation. Ministers and Tory Back Benchers back in the 1980s simply denied it: poverty did not exist; it was a figment of our imaginations. It was not then and it is not now.
The Child Poverty Action Group has estimated that 60% of the current benefit cuts fall on those who are in work. I totally reject, as do my right hon. and hon. Friends, that those who are not in employment are scroungers or not justified in receiving social security benefits. The severely disabled are among those being hit by the cuts.
The Institute for Fiscal Studies has said that child poverty will rise during this Parliament from 2.5 million to 3.2 million—an interesting figure, and I would argue that this debate is justified by that alone, and it explains why my right hon. Friend the Member for Oldham West and Royton and I urge taking action. The figures I have quoted mean, according to the IFS, that almost 24% of children in the UK are likely to live in poverty by 2015 next year. What sort of country are we—supposedly one of the most advanced industrialised countries in the world, yet 24% of our children will be living in poverty by next year? This compares with just over 19% in 2011—and that figure was far too high. The IFS goes further, projecting that, unless there are changes, current policies will impoverish a further 700,000 children between 2015 and 2020. That means some 4 million children growing up in poverty in the UK.
I had thought that Parliament in previous times, such as from 1945—I cannot claim to have been here at the time—was determined that poverty should largely be abolished, that full employment should occur and that no one should ever be in need again to the extent that people were before the second world war, yet we seem to be returning to that situation, which we hoped would be abolished for ever.
If we look at the policies being pursued—only 1% uprating of so many benefits, including child benefit; the change from the retail prices index to the consumer prices index as a basis for calculating benefits; the reductions in working tax credits and the rest—they all add up to explain why we need this debate on poverty. All this, of course, is without what the Chancellor has threatened—a further £12 billion-worth of benefit cuts that he would like to see introduced after 2015.
Is it surprising that so many people in need are turning to food banks, which my right hon. Friend the Member for Oldham West and Royton mentioned? During Education questions in September last year, the Education Secretary said that when people used such facilities as food banks, it was
“often the result of decisions that they have taken which mean they are not best able to manage their finances.” —[Hansard, 9 September 2013; Vol. 567, c. 681.]
That was his explanation—a leading member of the Cabinet—for food banks. The Trussell Trust described those comments as “not just insensitive”, as they obviously were to say the least, but “completely inappropriate”.
As anyone would know, people do not just go to a food bank for fun to ask for this, that or the other. It has to be authorised; people need vouchers and authorisation before food can be given. Does anyone in this House believe that people go along to food banks for the fun of it and to get a bit of free food? They go because they have no alternative. They have such limited incomes for bringing up their children, and I would have thought that many of them would feel humiliated by having to attend food banks. I would feel humiliated, and I am not alone. I would imagine that virtually every Member would feel humiliated if, as a result of limited income, poverty and so forth, they had to go to a food bank. How easy is it to justify that to the children? “Why are you going to a food bank, dad? Why do we not go to Tesco’s like everyone else?” Many children would ask such questions. We know why people go to food banks.
What about the figures? In 2009-10, about 41,000 people used food banks. By 2011-12, it had gone up to 128,000. As I think my right hon. Friend the Member for Oldham West and Royton mentioned, the latest figures from the Trussell Trust suggest that some 350,000 people are using them. Given that—fortunately—other organisations provide such facilities, the total number is about half a million. Half a million people in this country are using food banks! Are we proud of that? Do we feel that the House of Commons is doing its duty, and carrying out its obligation to deal with poverty and deprivation? Let me say it again: at the beginning of this year, 2014, half a million people are resorting to food banks because they have no alternative.
Other problems are being caused by cuts. For example, as a result of the impact of the cuts on local authorities, many home care visits are limited to 15 minutes. Those visits would not have been authorised in the first place unless they were necessary. Most of them involve disabled people and, in many cases, elderly people—in my age group or older—who cannot look after themselves. The number of 15-minute visits has increased by 15% over the last few years, and 60% of local authorities commission such visits. Why is that? In the main, it is not because any of them—including Conservative councils—are insensitive, but because, given the impact of the cuts, they see no alternative.
My hon. Friend has made an important point about the impact of the social care cuts. Is he aware that the 10% of local authorities that are the most deprived in the country face cuts six times higher than those faced by the 10% that are the most affluent?
That too is an important point, which I hope the Minister will bear in mind when he winds up the debate.
For those who have limited means, for those who cannot find work and for the disabled, the last few years—especially the last three—have become a desperate struggle for survival. I repeat what I said earlier. We should be ashamed, deeply ashamed, that so many of our fellow citizens—and let us not forget for one moment that they are our fellow citizens—are having to live in such circumstances. I only hope that there will be a change of Government, and that the new Government will do what I have every confidence that they will do. I hope that they will develop policies that will make life easier for those in need, as a Labour Government did previously. I was a bit of a critic of the last Labour Government on occasion, but there is no doubt that, overwhelmingly, my constituents were greatly assisted by their policies. I said so at the time, and I have said so many times since then.
This debate is essential, and I congratulate my right hon. Friend the Member for Oldham West and Royton on introducing it. I hope that, as a result, Ministers and Conservative Back Benchers will recognise how vital it is that change should come.
I congratulate Mr Meacher and my hon. Friends the Members for Worthing West (Sir Peter Bottomley) and for Birmingham, Yardley (John Hemming) on securing the debate. I welcome the opportunity to discuss the impact of the Government’s welfare reforms on poverty.
Evidence from my constituency certainly suggests that an increasing number of people are finding it very difficult, or impossible, to make ends meet. That applies particularly to those who are out of work, but, as other Members have said, it also applies to those who are in work. However, I think it important for us not to restrict our review to welfare reforms. More and more people in my constituency, and indeed throughout the country, are entering work and finding a way out of poverty as a result of the Government’s focus on job creation and apprenticeships.
We also need to consider the overall effect of the work that is being done to cut the deficit. As was pointed out by my hon. Friend David T. C. Davies, the purpose of that work is to maintain confidence in the United Kingdom as a borrower, to keep interest rates down—let us not forget that we are currently spending nearly £50 billion a year in interest, and that the figure is rising—and to ensure that we as a country can maintain a proper welfare safety net for our people, not just in the short term but in the long term. A country that continues to run a 6.8% annual budget deficit will eventually be unable to afford not only a welfare safety net, but the other vital safety nets that we provide.
The hon. Gentleman makes many very measured speeches, and I know that this will be no exception. Does he agree with my right hon. Friend Mr Meacher that the number of working people who live in poverty is now greater than the number in workless households?
I do agree, and I shall say more about that in a moment. It is a matter that should concern all Members on both sides of the House, and I do not believe that the Government are immune to that concern.
A universal free health service and a universal free education service are also vital safety nets, but it is essential for the Government, on behalf of the nation as a whole, to keep a close eye on both open and hidden poverty. Poverty is often more hidden than open: many people do not complain and do not come to our surgeries, but get on with it, day in, day out. However, those people are really struggling, and it is incumbent on the Government to keep an eye on them. Governments exist for all their citizens, just as we as Members of Parliament represent all our constituents, whether they voted for us or not. Certainly, they do not exist only for the 20% or 25%—or fewer, if we count those below the voting age—who cast a vote for them. I know that Ministers in the Department have always taken that very seriously—especially the Secretary of State, not least when he established the Centre for Social Justice, of which I have been a supporter for some time.
It is also vital for Governments to consider both the short-term and the long-term effects of their policies. As I have said in the House before, I believe that in the short term we need to look again at the way in which the spare room rent subsidy is being implemented. Increasingly, arrears are accumulating. One social housing provider in my constituency already has arrears of 37%, and it is a good provider. Many others have far lower collection rates. That will eventually lead to evictions or write-offs, both of which are costly in human and financial terms. A suggestion I have made before is that the rate for the spare room rent should be substantially lowered from its current percentage levels to a fairly nominal amount initially if we are to maintain the principle, which I believe we should, and therefore make it affordable. It should be increased only as the supply of suitable accommodation approaches demand.
The right hon. Member for Oldham West and Royton mentioned sanctions, which are applied to some of my constituents in a rather arbitrary manner. I ask the Minister to consider the way in which the Department sanctions jobseekers. I think it important for sanctions to exist, because we cannot be taken for a ride, but those who are genuinely seeking work should not be sanctioned as a result of mere technicalities, as has happened in my constituency.
The Chancellor recently talked of removing benefits from those aged under 25. I shall say more in a moment about the £25 billion hole that needs to be filled. Certainly, everything possible should be done to ensure that the under-25s have all the support they need in the form of education, training and work. It is clearly important for people to see benefits as a safety net rather than a way of life, but removal of, for instance, housing benefit from under-25s across the board would have a drastic impact on young people who need to live away from home and who have no support from their families. The YMCA in Stoke-on-Trent is an excellent organisation. Its managing director, who is a friend of mine, drew my attention to the consequences that such action would have on its excellent provision for young people, most of whom it is trying to get into work. This is a case of supporting people during transition. For younger people, we need to recast this support almost as income for productive work for all those who are able, so they get used to the idea of work, which almost all of them want to take up; but that support must remain.
We need to do more to help councils deliver more homes, perhaps by relaxing the existing borrowing rules for local councils, particularly on affordable and social homes. We also need to look at the possibility of localising employment schemes. The Work programme is doing some very important work around the country, but I would like it to become more local, so local councils can take more responsibility for running it in their own areas. The universal credit is incredibly important and I wholeheartedly support it. When it is introduced in each area, we should look at localising support and giving responsibility for managing finances as much as possible to local councils.
Finally, let me return to the question of the £25 billion hole. This is a fact and it is something a future Government, of whichever party, will have to face. There are so many ways we can reduce it. We can raise taxes, we can cut departmental spending and we can cut benefit and pension spending, or we can increase growth, which clearly is the preferable option we would all like to see. However much growth is increasing by at the moment, however, it is not going to fill that gap in the coming years. Can we raise more in taxes? I would rather see whether we can remove some of the concessions, and I have mentioned before the high rate of pension tax allowance, which is not a tax rise but is reducing the allowances people on higher incomes can claim when making pension payments. That costs us several billion pounds a year.
I do not believe there is much room to cut departmental spending in certain areas. I would certainly not want to see any more cuts in defence and security and schools and education, but we do need to have a look at one or two of the existing ring fences, although perhaps over the coming few years and not immediately. For instance, I would look at different ways of maintaining the free-at-the-point-of-delivery national health service—more through a progressive contributory national insurance system than out of tax. That would be one way of raising the income required to pay for our free-at-the-point-of-delivery health service and giving the Chancellor a little more wriggle-room on the £25 billion.
In conclusion, I think it is vital to look at poverty not just in terms of welfare reforms—important though those are and though their impact is—but in the round at all the things the Government are doing, whether in the field of job creation or protecting the vital national health service and the vital schools budget. Therefore, although I support this motion, if this inquiry is to go ahead it should look at all those things in the round, rather than just focusing on one or two of the points that have been raised.
It is crucial when the Chancellor complacently talks of a recovery that Opposition Members articulate the more accurate reality for the hard-pressed and hard-working families of Britain, but I will concentrate on the effects of the reforms on my city, and I make no apology for doing that.
According to a study by Sheffield Hallam university and the Financial Times more than 64% of neighbourhoods in the Liverpool city region can be categorised as being in economic deprivation. The average for a local authority is just 15%. Such a stark statistic should in itself explain why Liverpool’s five MPs—I am delighted that my hon. Friend Stephen Twigg is present—have been so steadfast and vocal in this place in our opposition to the Government’s welfare reforms and cuts across the spectrum.
Let us look at the issue of the abolition of council tax benefit. While Liverpool opted to reduce rebates by no more than 8.5%, a further 44,000 Liverpool households of working age have had to start paying additional council tax as a result of the Government change, at an average of £1.70 per week. I know some Government Members will scoff at that, and I know it works out as roughly the same amount per year as the Prime Minister pays for a haircut, but when just a few pounds a week makes all the difference the loss of £1.70 a week hits low-income households hard.
There is not only the council tax benefit issue, of course. There is also the Government’s beleaguered bedroom tax, as we have heard, which does not just affect the disabled; it actively targets disabled people. This has detrimentally impacted on 11,600 working-age households in Liverpool with an average reduction in housing benefit of £14 per week. In Liverpool, despite the largest budgetary cut in the country and with the council being asked to do even more but with 52% less in budget, council officers have had to deal with a 34.2% increase in benefit appeals which in real terms equates to 6,768 individual cases with the resulting costs to the staffing budget.
In 2013 Liverpool city council saw 7,360 people apply for discretionary housing payments, which amounts to a staggering 610% increase on 2012. More than four out of five of these applicants were social sector tenants affected by the bedroom tax. Liverpool city region is one of the five most indebted areas in the UK and the national, regional and local figure for individual and household accumulated debt is rising. That is why unemployment is never a price worth paying and why exploitative zero-hours contracts and the proliferation of part-time temporary jobs are never the answer.
My constituency of Liverpool, Walton is in the top 10 constituencies for the highest levels of unemployment and, as I am certain other Members would agree, the vast majority of the unemployed people who come to see us are desperate to find work. They want a job—they want to find employment—but unfortunately opportunities are limited.
May I reinforce the point my hon. Friend is making about people wanting to work? I held a jobs fair in Liverpool in October of last year, to which more than 3,000 people desperate for jobs or apprenticeships came. I want to support what my hon. Friend said about the overwhelming majority of the people who are unemployed in his constituency and mine desperately wanting work.
I agree, and I support the sentiments behind my hon. Friend’s holding of that fantastically successful jobs fair and the sentiments of the ordinary people we speak to. Sometimes we in this place see everything through the prism of what happens in London and that is wrong. Out in our constituencies the reality is very different from the growth we sometimes see not across the board in London and the south-east, but in certain parts of this end of the country.
One of the reasons why I brought the cruise terminal to Liverpool in my previous job as a Transport Minister was to create jobs, while that decision was refused by the previous Labour Government. A lot of Government Members have exactly the same aspirations as the hon. Gentleman has for his constituency—to bring jobs to the area, which is why I made that decision.
I thank the Minister for that intervention and I have previously put on record my thanks to him for making that decision. It was a brave decision, but it was also the right decision for Liverpool and for this country. I might be playing into the hands of Conservative Members by saying this, but when we joined the EU—the common market, as it then was—Liverpool found itself on the wrong side of the country and business transferred to the east. However, Liverpool is once again an international destination of choice, and it now finds itself on the right side of the country for the increasing transatlantic trade. We are hoping to open the first Panamax facility in the UK there in the near future, which will create jobs. Perhaps the Minister can therefore claim some credit as a catalyst for the regeneration of our waterfront.
I want some more credit, actually, because Peel Ports will do that, and I also granted permission for that. The commercialisation of the Manchester ship canal will really open up that part of the world to international trade.
The massive increase in apprenticeships has been mentioned, and we welcome any genuine increase in their numbers. I used to work for the Learning and Skills Council, however, and I know that a large percentage of the increase in apprenticeships that the Government are claiming consists of rebranded training programmes for over-25s who are already in employment. What we really want is for the Government to tackle youth unemployment in those aged under 25 and to introduce real apprenticeships to bring those people job opportunities.
Lots of people in my city are on benefits for the very first time. Far from being in clover—it beggars belief what we read in the right-wing press—they are struggling to make ends meet, and the problem that thousands of Liverpudlians are facing is new to them. For many, the idea that they might miss a rent payment is totally alien. They have not done that in the past 20 years, but since May 2010, their individual household incomes have been on such a downward trajectory that they now find themselves in rent arrears, seeking advice on debt management and unable to afford the daily cost of travel, food and energy.
The Government now admit that, thanks to their flawed economic plan, they will miss their own economic targets by more than half, yet they still try to pass it off as a great achievement. That plan has meant that growth has been non-existent for three years, that small and medium-sized businesses have gone bankrupt at a rate we have not seen before, and that people’s money no longer goes as far on payday. The Money Advice Service estimates that 8.8 million people in the UK now have serious debt problems, but only 17% of that group have access to the debt advice that they need. That shows the depth of the problem.
Figures suggest that 40% of the adult population in Liverpool are struggling with serious debt problems. Let us stop and consider that for a moment. More than a third of all working-age people are in serious debt. Their wages are simply not enough to pay off what they owe, let alone pay their monthly bills. That is central to my party’s reason for highlighting the cost of living crisis. The findings of the New Policy Institute prove that, for the first time, more than half of the 13 million people living in poverty in the UK are in working families. That really exposes the folly of the Government’s rhetoric about strivers and skivers, workers and shirkers. With the cost of living rising faster than wages in virtually every month since this Government came to office, it is a betrayal of the Britain we live in not to recognise that recovery is a hell of a long way off. The fact is that, out there in the real world, people are hurting.
Just under 11,000 people were fed by the South Central and North Liverpool food banks between April and October 2013. I took the opportunity to visit the food bank in my area on Friday, and the work that it is doing is unbelievable. It has never been so busy. Instead of listening to the absolute nonsense peddled by the Secretary of State for Education about life choices, we should be congratulating those volunteers and the people who donate to food banks so that our constituents and citizens can have a decent meal of a night. Forget the Government’s flawed line about the rise of food banks over a 10-year period while Labour was in office; that figure of 11,000 is double what it was just 12 months ago, and 35.3% of those who have been fed by the Liverpool food banks are children.
The poverty inflicted by this Government has wider implications. In a letter to the British Medical Journal, David Taylor-Robinson of the university of Liverpool and his fellow academics have highlighted the doubling of malnutrition-related hospital admissions nationally since 2008. I am sure that many Members will also have seen the recent briefing from the charity Shelter, encouraging those with rent or mortgage repayment problems to seek early advice rather than allowing the problems to build up. Unfortunately, the cuts to citizens advice bureaux and legal aid make it more difficult to get appropriate advice. One of the advice centres in my constituency has had to close. In quarter 2 of this financial year—I am going to run out of time unless somebody intervenes on my to allow me an extension. [Hon. Members: “We can’t.”] All right. In that case, I have run out of time, Madam Deputy Speaker.
Order. To try to ensure that every Member who has indicated that they want to participate in the debate may do so, I am going to reduce the time limit to seven minutes. I hope that that will mean that everyone will be able to contribute, although I cannot guarantee it. It might be necessary to reduce the time limit further.
These debates are important in highlighting matters of detail. I am pleased to have signed the motion for this one, which calls for an inquiry into the effects of the benefit system. The biggest detail involved in all this is of course the deficit. When this Government took over, the country was borrowing £150 billion a year, which was added on to the debt each year. If we reduce that too quickly, however, it will cause economic dislocation, so it will have to be reduced relatively gradually. That is why it is surprising that the Opposition are criticising the Government for not reducing it to zero straight away. Obviously, we cannot do that sort of thing.
Another important detail is universal credit. I am very supportive of universal credit because it goes down the route of creating an environment in which people can benefit by being in work. There are people who abuse the benefit system, but the majority of people who receive benefits need support from the state in order to live. It is important, when we are dealing with the people who are abusing the system, that we do not throw out the baby with the bathwater.
I have been doing some work with the 6 Towns credit union. One issue with universal credit is that people will receive a sum of money each month then have to pay their costs out of it. The reason for doing that is to ensure that people who go back into work and are paid monthly do not suddenly find themselves unable to cope financially. There is no doubt that that prospect often makes people frightened of taking a job. The motivation of paying universal credit on a cash-flow basis is a good one, because it is designed to create an environment in which it is easier for people to get into work.
To achieve that, however, there must be ways for them to manage their cash flow, because not everybody is good at that. That is why I am pleased that the 6 Towns credit union has expanded its modus operandi and its common bond to include a lot of Birmingham, including my constituency. When universal credit comes in, my constituents will now have a service towards which the Government have put some money, because they have put money towards credit unions generally.
Specific issues need to be looked at. I always worry about the debate on food banks, for example. If we do not look at individual cases and work out why people are depending on food banks for three days, we cannot identify the problems in the system. The Trussell Trust was created in 2000, so in 1999 there was no Trussell Trust and no food banks. There were schemes then—people would go to supermarkets and get stuff that was out of date; there were all sorts of ways in which people found emergency food support. The fact that we have good organisations with good volunteers offering a good service does not mean that suddenly everybody who is using that service is doing so as a result of changes in Government policy. We have to review this in detail and look at the individual cases.
One of the general sorts of cases I am concerned about involves people transferring off employment and support allowance and then not being informed enough to claim jobseeker’s allowance. I believe that the Government are working on dealing with that. A number of constituents have come to me with those cases when they are destitute. My top priority is to ensure that people are not destitute. We see that happening from time to time and we need to identify those cases. Sometimes when I tell people that we can give them a voucher for the food bank they tell me, “I cannot afford to cook the food, so there is no sense in me having anything from the food bank.” It is important to prevent people from being destitute, and I have raised this issue directly with the Minister and in a ten-minute rule Bill.
This is where the difficulties lie. I do not think that those are the details of the situation, but people misunderstand the situation and end up suffering as a result. I have never liked any of the cuts, but we have to make cuts because of the deficit. The one I would be most uncomfortable about is restraining the inflation increase to 1%, and if things get better, I would at least like to examine the situation of the people right at the bottom of the pile—those on £71.70 a week or some £52.35 if they are under 25. They may only be losing out by £1.40 a week, but that is a lot for someone in that situation. I would like the Government to consider that issue.
I am also worried about the interrelationship between the welfare cap and victims of domestic violence, and whether there are situations that need more attention. I believe that people can get discretionary housing payment to leave a violent home, but it is important that we ensure that there is a route out of domestic violence for women. I am worried about that issue, just as I am about some wrongful sanctioning that I have seen. That does not help at all, because it undermines the whole process.
I would also like to see a substantial increase in the minimum wage, because as the economy is improving the Government should look at that, rather than maintain things as they are. I might be the first person to mention that. As colleagues are aware, I am not so uncomfortable about the spare room rent. On Saturday, a constituent came to see me because they were living in a one-bedroom council flat with a family of four. If that is happening, clearly there is space for people to downsize; I know that Bromford Housing Group has difficulty renting out single-bedroom properties, as it has said that to me. The details matter on this, and I am trying to get those details from my local authority in order to look at these things.
I am unhappy with my local authority cutting the amount of money it is putting into council tax benefit and therefore increasing the amount of council tax paid by people on JSA. We also have to examine the issue of habitual residency for in-work benefits, because a situation where people are encouraged to come here to be self-employed so that they can get a large amount of benefits even if they are not earning any money being self-employed—this is The Big Issue case—is not a good way of doing things. Debt issues are critical, and I am pleased that the Government are making some moves on payday loans, because when people get into a mess it is difficult to get out of it.
Does my hon. Friend agree that fiscal education in schools is playing a vital role in helping the next generation of adults to be able to manage their personal finances, however modest, and to understand how to stay out of debt?
That is very important. The essence of what we are trying to do with the universal credit is get people to be able to manage their accounts. Again, people such as those at 6 Towns credit union offer services that facilitate that. That is definitely the way to go, but we need government action—regulatory action—on payday loans because people are not necessarily that numerate and they see these things as a short-term solution without being aware that they create a long-term problem. That is clearly part of the issue.
As I said at the start, the details are crucial. The motion calls for an inquiry to be set up that is independent of Parliament. I would prefer a parliamentary inquiry, but I am pleased to have my name down in support of a motion asking for these issues to be examined. The details are critical and they need to be kept under continuous review.
I congratulate my right hon. Friend Mr Meacher on securing this incredibly important debate on the need for a commission of inquiry into the impact of this cruel, callous coalition’s policies on poverty in the United Kingdom. I wish to focus in large measure on the impact of housing and the welfare reforms that have been put in place, but I wish to start by addressing the intervention made by my hon. Friend Andy Sawford, who referred to the pernicious reforms that have been made to the council tax benefit system. We hear a lot from the Government about freezing council tax. That is fine and dandy for the people who have the resources not to need council tax benefit, but the very poorest people, even in those local authority areas that had a freeze on their council tax, are seeing an increase in the amount of council tax they are expected to pay. That is absolutely disgraceful, and I do not know how Ministers can sleep in their beds at night when they are inflicting such penalties on the poorest people in our country.
As I have said, housing is a key area in addressing poverty in our country. Jeremy Lefroy said that the commission we are talking about should have a slightly wider remit, and that is important, as it should incorporate housing, too. What we saw when this Government came to power was a massive reduction in investment in affordable housing in our country. One of the first things they did was to cut it by 60%—that is what they did when they first came to power. Their housing policy is shambolic. They are not building anywhere near enough houses for the people in our country, and the houses they are building are too expensive—to buy or to rent. People are caught in a Catch-22 situation. Youth unemployment is growing, with about 1 million young people on the dole, and low pay is endemic. As my right hon. Friend the Member for Oldham West and Royton pointed out, some 6.7 million people living in poverty in our country are in employment —that is disgraceful.
Let me briefly touch on my personal story, and how things have changed from the 1970s in terms of what ordinary working-class people were able to do and the sorts of lifestyles they were able to afford, particularly the housing. I was a 19-year-old apprentice bricklayer when I was able to buy my first house, with the benefit of the option mortgage scheme brought in by the 1974 to 1979 Labour Government. I was earning £60 a week and I was able to buy a brand new three-bedroom house that backed on to a canal for £10,000. That was three times my salary then, but it would be impossible to do the same today because the average price paid by a first-time buyer is £185,000. I have checked on the internet what a bricklayer can earn these days. On average, they earn £10.28 an hour, or £21,382 a year, so the average price for a first-time buyer would be a multiple of 8.6 times their salary. In this day and age, an apprentice bricklayer earns around £170 a week, or £8,840 a year, so a multiple of 21 times their salary would be required. People can no longer put down roots in the way that they did, because they have been priced out of the market. I am talking not just about buying but renting as well.
It is vital that we build the houses that people need. Labour is committed to building 200,000 homes per annum, which is vital in terms not just of delivering a social need but of putting thousands and thousands of people back into work. We need a renaissance in council housing, because the private rented sector is ill-suited to social housing, which has led to the obscene housing benefit subsidy system that was set up by Sir George Young when he was the Housing Minister. On
“If people cannot afford to pay that market rent, housing benefit will take the strain.”—[Hansard, 30 January 1991; Vol.184, c. 940.]
Well, take the strain it most certainly has. Some £24 billion a year is being paid out in housing benefit. According to the House of Commons Library, £9.3 billion is going into the back pockets of private landlords. Compare that with the £1.1 billion this Government are putting into building affordable homes for people. The affordable homes programme summary said that will result in just over 67,000 homes per annum. Imagine if we put all that money into building homes for people. Think of all the jobs that could be created. If we just used the amount that is going to private landlords, we would be able to build 600,000 homes a year. We are building nowhere near that. We have a massive housing crisis in our country. There is a crazy housing subsidy system, which needs to be reformed. There are 1.7 million households on the housing waiting list across our country, 4,000 of whom are in Derby. More and more people are reliant on the vagaries of the private rented sector. That cannot go on. What we need is a change in emphasis. We need a bricks and mortar subsidy to build the homes that people need. We need a council house renaissance, we need to regulate the private rented sector and to ensure that land is released to build homes that people can afford.
Does my hon. Friend also agree that Labour’s pledge, if we were to be the next Government, would mean an additional apprentice for every £1 million of public sector contracts?
That is a really important commitment. Let me refer if I may to some other statistics. I have talked about a massive investment in council housing. It is important to recognise that for every £1 of public sector investment in infrastructure, the Exchequer gets back 56p. As the net expenditure is somewhat less, it is well worth making that investment to generate the apprenticeships to which my hon. Friend referred and the jobs across the piece that are required, and to build the homes that people need. We need this commission. Its terms of reference should be somewhat wider than has been set out in the motion. If we can invest in the housing that we need, it will help to create stable communities, generate jobs and promote economic growth. Yes, we need a commission, but we also need a Labour Government in 2015 with the radical commitment that we saw in 1945 to deliver what Beveridge achieved. We need to deliver on the recommendations of the commission, which has been called for by my right hon. Friend Mr Meacher.
That was an interesting speech. I am glad to support Mr Meacher in his suggestion that we have a commission to provide comprehensive, unbiased measures of how action changes level of poverty—absolute and relative poverty. That should include what people spend their money on and what makes people more likely to find themselves in poverty. We know about disability and the dependency of people before they get a job. We know about people in retirement, family deformation and mental health issues. A whole range of considerations should be taken into account.
Hugh Bayley is no longer in the Chamber, but he made some comments about the national debt. Most of us know the difference between a deficit and a debt and could talk for ages about gross Government debt, public sector net debt, unadjusted measures of public sector net debt and UK net borrowing, whether as a percentage of gross national product or not.
It is better to understand that the previous Labour Government had some merits. In their first three years, they stuck to the Conservative spending plans, net debt did not go up and we all benefited. From 2001, there was a massive expansion in public sector employment of 30% that was, I think, associated with the structural deficit exposed by the recession and the bank crisis.
I started in public policy in the early 1970s when I ran a thing called the Family Allowance Movement, trying to introduce family allowances for the first child. A Labour Chancellor asked, “What is the point of having a family allowance? I am going to increase the married man’s tax allowance.” Those are the arguments we come back to 30 years later in a rather different sense. Balancing people’s resources and needs at any one time and over a life circle is how I prefer to look at it.
Let us not make any comments about any individual, as my hope is that many of the people who follow us will make fewer mistakes than we did, but if, for example, the time of family formation comes later on average and more children are born into households that can make some reasonable provision for them, we will be better off. At one stage, I looked to see who was most likely to smoke, a habit that takes £60 or £70 out of post-tax income. The answer was lone parents on income support. We would be able to give a lone-parent family an extra £50 or £60 of disposable income if a third of our teenagers did not take up smoking. As those who are most likely to take up smoking are those who were most likely to be deprived in their early lives, we could make a difference to people’s lives.
I am not absolutely certain that we should be too keen on a welfare system that guarantees independent housing to young people. My mother used to say that if someone was a lone parent, setting her up—it is normally a her rather than a him—in independent housing at the age of about 18 with a child, alone, is not the best thing as parents need to learn parenting from those who are around them.
What makes a difference to me is how we can reduce the cost of borrowing by households or individuals, which is why I strongly support the mentions of credit unions. I look forward to hearing from the Minister when credit unions will be able to charge a rate of interest per month that might look high to most of us but that is dramatically lower than the cost of door-to-door lending or some of the other sources of credit available to those who do not have assets or reliable incomes and who are in difficulty.
I recognise the point made by Chris Williamson about how it was possible in his day for someone with ordinary earnings to buy an ordinary home. I first got a home in Worthing, my present constituency, in 1966. Almost anybody there who had a job could afford to buy a home. That has changed and it is crazy that we have an economic system in which half the value of a home is the site value. We must find some way of ensuring that ordinary people in ordinary jobs can afford to buy homes.
We can also make a difference, as I did when I was involved in a small electrical contracting business before I came into Parliament. Most people’s earnings were twice their guaranteed earnings and by putting people almost on salaries I made sure that they could have guaranteed income for the year. Three quarters of my colleagues were able to buy their own homes for the first time. There are some mechanical things that matter.
I am grateful to my hon. Friend for that intervention and I appreciated his speech, too. We ought to try to ensure that we have sources of lending in which people understand the industries in which people are working. That is where the building society movement came from—originally, it was about building homes. If we could get some mutuality back into the agency area, people would be able to decide who could be lent money and who should be deferred.
The last point in my mind concerns how we can go on preparing people for the jobs and occupations of the future. Many people’s futures will be as entrepreneurs, as they set up their own businesses; others will be in employment. I remember with pleasure Peter Thurnham, one of our former colleagues. When he was made redundant, he used his redundancy money to buy two machine tools, set up an engineering business and eventually employed 150 to 200 people. People sometimes say to me, “MPs shouldn’t have outside interests.” I would far prefer to have in Parliament people such as Peter Thurnham, who can tell us how business and employment work and how to get more people off welfare and into the kind of jobs that make them pretty independent for most of their life.
Many of us will require some support at some stage in our life; relatively few of us need support all the way through our lives. Before this Government came to office, we were getting to a stage at which too many families were in dependency from generation to generation; Keith Joseph told us quite a lot about that. Statistics show that only 10% of people who were in the bottom decile—the bottom 10%—10 years ago are in the bottom 10% this year. There is a great deal more movement among those who are poor or very poor than most people understand.
It is a pleasure to follow Sir Peter Bottomley. I congratulate all those who signed the motion and did the work to secure this debate, because I think that a commission of inquiry should be established to investigate the impact of the Government’s welfare reforms on the incidence of poverty. I say that because of my experience as a constituency MP, and my knowledge, from this place and other places, of what is happening nationally.
The reality is that all of us are inundated in our constituency surgery by constituents who are experiencing the impact of the Government’s welfare reforms. Mr Scott, a constituent, came to see me last week; he was diagnosed with bowel cancer last summer, and had applied for the personal independence payment. He has worked all his life; it was the first time that he had had contact with the welfare benefit system. He is still awaiting receipt of any money. Many other constituents who come to see me, including carers and those who are disabled, are suffering as a result of the bedroom tax.
There has been a massive increase in poverty in this country since 2010. Some of that is associated with welfare reforms; some is related to other aspects of Government policy, and what is going on in the country with low pay, wage freezes, wage cuts, and less secure forms of employment, and all the other issues that we spend time talking about in this place.
We particularly need to focus clearly on welfare reforms, both for those in work and those who are not working. Since 1997-98, there has been a decrease in poverty for most of the time. Some 28% of the population lived in absolute poverty in 1997, but by 2010, that had dropped to 15%—still a scandalously high figure that is unacceptable in any civilised country, but the reality was that 2.3 million children and 2 million pensioners were lifted out of poverty in that time. The country can be proud of that, even though, as I say, a huge amount more needed to be done. Since 2010, absolute poverty has increased by 1.4 million people, including 300,000 children and 200,000 pensioners. There can be absolutely no doubt that much of that increase in poverty has been a direct result of the coalition Government’s policies.
I will talk about some of those policies. We have had these debates already in this place, and we have divided on many of these issues. One of the impacts that will have the biggest cumulative effect over time is the uprating of benefits in line with the consumer prices index instead of the retail prices index. Of course, we already see the impact of that change. In 2010, when the Government changed the indexation, the difference between RPI and CPI was the difference between 4.6% and 3.1%. In every year since, RPI has been higher than CPI. Of course, the impact on our pensions and benefits affects disproportionately those on the lowest incomes.
Let us look at those in receipt of carer’s allowance. In April 2010 they received £53.90 a week. If that had increased under the old system, using RPI, they would now be receiving £61.08 a week, rather than £59.75. They are therefore £167.96 worse off each year as a result of the switch from RPI to CPI.
We see a similar situation with disability living allowance. Someone in receipt of the higher care component is now £221 worse off as a result of the switch. People with more serious disabilities who are on the higher rate mobility component are now £155.48 worse off a year. Those who receive both the higher rate mobility component and the higher care component are now £376.48 worse off a year. Those might sound like relatively small amounts to some people, but the reality is that those benefits are received by some of the poorest and most vulnerable people in the country, who were already struggling and finding it difficult to cope.
People in receipt of employment and support allowance—another form of benefit that many constituents come to see us about—are now £342.68 worse off a year as a result of the shift from RPI to CPI. It is not just that shift, but the impact of other policies, such as the 1% cap on benefits, that is having an effect. Ministers have claimed that those in the ESA support groups are exempt from that, but of course that benefit is both a basic payment and an additional payment. Although one is exempt from the 1% cap, the other is not. The reality is that for almost every benefit we look at, we are seeing our constituents receive less money every week, every month and every year.
Does my hon. Friend agree that cutting benefits for the poorest people in our communities has a knock-on impact on economic growth, because they inevitably spend the money in their pockets in the communities in which they live?
I agree with my hon. Friend. I am sure that that is the case in his constituency, as it is in mine. In areas that are disproportionately reliant on the public sector and the welfare state, cutting benefits is taking millions of pounds out of the economy every year, which is simply putting us in a worse situation.
We have also seen a massive increase in the impact of benefit sanctions, as I am sure many Members are only too aware from their constituencies. It is often the same people receiving those benefit sanctions again and again, and each time it is for a longer period. Many of those people have nowhere to go, because they can go to a food bank only three times.
The other major concern is the bedroom tax, which constituents come to see me about all the time. In North Ayrshire we have seen a 756% increase in discretionary housing payment applications. Only 66% are accepted, which means that a third of those people do not get the payment. Indeed, when people go back to apply the next time, because it is a time-limited payment, they are often refused. That is having an impact on council rent arrears. Rent arrears in North Ayrshire, for example, have increased from 3.6% of annual rent to 5.5%.
Those are just a few examples from my constituency, but we all have many others. This is having a massive impact on our country. We are seeing a massive shift in wealth. We need someone to look at that seriously, which is why I think that the motion before us—
Let me start by thanking those Members who pressed for this important debate, particularly my right hon. Friend Mr Meacher and Sir Peter Bottomley. I believe that our welfare system is something that we should be proud of in this country. It provides a vital safety net, and not just for people who have fallen into poverty, but for the disabled, older people and those who need to get back into employment.
However, we should not fall into supporting an argument that suggests that the system is perfect. Too many people take the view that the welfare system is a sacred cow that should be left alone. I do not share that view; on the contrary, I believe that self-reliance and making the welfare state much more accountable and appropriate to people are extremely important. I certainly believe that reforms can be made, especially to the way that the system supports and challenges people—and, yes, pushes them back into employment. However, when reform of the welfare system is undertaken we must be certain that we do not abandon the most vulnerable people and push them into poverty.
I will give two examples of the Government’s welfare reforms having left vulnerable people without the safety net they need. First, I want to talk about one of my constituents, Sheila Holt. On Friday I met her father, Mr Kenneth Holt, and other members of her family. Sheila is 47 years old. She had an exceptionally traumatic childhood that I will not detail here, but needless to say it was a period of her life that scarred her mentally. She has not worked for 27 years because she has a severe psychiatric condition; she is unable to work. Because of cuts, I suspect, Sheila was relatively recently persuaded to sign off her psychiatric treatment. Soon after that, she was being pushed by the DWP towards the back-to-work scheme. Her family advocated for her, explaining that she had had trauma in early life and had a psychiatric condition. They made those points strongly, but to no avail. Sheila had to start attending back-to-work classes in another town. She struggled with meeting other people. Most importantly, no mental health support or service was offered to her. The safety net was not there for her. She also had to start paying the bedroom tax. Needless to say, she was falling into poverty and beginning to worry about becoming increasingly poor. She started to become agitated and her medication could not keep up with her condition. On
The reason I tell this story is that Sheila’s family want people to be aware that she was pushed into this situation. Soon after Sheila started her life, she experienced terrible trauma that mentally crippled her. The truth is that she is trying to live through the welfare system as best she can, but the unsophisticated and haphazard way in which it has been changed has forced a very vulnerable woman into a terrible predicament. She had a very difficult early upbringing and now finds herself in the situation she is in today.
My second point is about the discretionary social fund, which has provided crisis loans to people in need. Hon. Members will be aware that in April this year the DWP passed that responsibility on to local authorities. They will also be aware that the fund is not ring-fenced, and it has been open to local authorities to spend it however they wish. For me, this came to light because a number of constituents were presenting to me with difficulty in being able to claim any sort of crisis loan from any sort of crisis fund. One woman who came to see me was heavily pregnant and was being told by Rochdale council’s social services that unless she provided a carpet in her property she would lose the child, who would be taken into care. Ironically, the local authority was not administering the local discretionary social fund in a way that would enable her to claim money to be able to get the carpet.
Rochdale is not an exception to the rule. I carried out some research looking at local authorities right across the country, and it shows that the passing down to them of this responsibility has meant that they have set criteria far too strongly, to the point where one local authority has spent only 1% of its budget for helping people through crisis loans or grants. The irony is that, when the fund was administered nationally, it encouraged self-reliance because it was a loan that the recipient could pass back, but since responsibility was given to local authorities it has not done so because it is now a grant that cannot be passed back.
The best bit came just before last Christmas, when the Government announced that the fund will be scrapped completely from 2015. It will not exist at all and there will be no safety net for those people who really need it. They will be pushed towards loan sharks and money lenders. That will certainly happen in Rochdale and, I have no doubt, in other places as well.
I certainly take on board the point that we are moving that way in some respects. I am wholly in favour of reform of the welfare state, as I pointed out at the beginning of my speech, but it has to be done compassionately and it has to retain the safety net. If we do not do that, we will see, as my hon. Friend suggests, a return to Victorian values in the way that we administer our welfare state.
I call on the Government to reverse their decision on the discretionary crisis fund. I believe that the purpose of the welfare system is to provide a safety net for the vulnerable, but it is clear that some of the Government’s reforms are destroying parts of that safety net and leaving people much more vulnerable to poverty. As my hon. Friends have said, we need an inquiry into how the reforms are impacting on people so that they are not abandoned and left to poverty.
May I start by congratulating my parliamentary neighbour, my hon. Friend Simon Danczuk? I agree with him that we must reform the welfare system and make it sensitive to the needs of the 21st century. I also congratulate my right hon. Friend Mr Meacher, who is another constituency neighbour of mine—I am in total agreement with the points he raised—and the other hon. Members responsible for securing this debate.
I want to spend the next few minutes discussing a few points, particularly those that constituents have raised with me in my surgeries and elsewhere. The Joseph Rowntree Foundation annually monitors social exclusion and poverty and produces data on them. Its most recent report, which was published last month, shows that 3.5 million children, or 27%, live in poverty. In some parts of my constituency, the figure is nearly one in two. The Institute for Fiscal Studies has said that it expects an increase of 1.1 million children living in poverty by 2020 as a result of tax and benefit changes.
Three million parents also live in poverty. The number of pensioners living in poverty has fallen to 1.5 million, or 14%, which is the lowest level in 30 years, but the number of working-age adults without children living in poverty has risen to 4.5 million, which is the highest level in 30 years.
That is only half the story, because those relative levels of poverty relate to median incomes. The average income has gone down by 8% since 2008, which means that 2 million people who would have been deemed to be in poverty in 2008 are not classified as such now, because incomes have dropped. Incomes are going down, but prices are rising. The energy prices of the big six have gone up by 37% since 2010 and food prices went up by 32% between 2007 and 2012.
The most worrying thing—this point has already been made—is that we are seeing an increase in the working poor. For the first time since the data series started back in the 1980s, poverty in working households is higher than that in workless and retired families combined. Therefore, work is clearly not paying. In spite of a shared objective of wanting our welfare system to make work pay, it is not. I was very interested in what Jeremy Lefroy said about phasing in the introduction of some of the welfare measures. They have been brought in too soon, and they are having a huge impact on families.
Related to the increase in the number of working households living in poverty is the increase of the number of people in low-paid work. For 46% of working families in poverty, one or more of the adults is paid less than the living wage. In total, about 5 million people are being paid below that level, which disproportionately affects women, 27% of whom are paid less than £7.40 an hour.
If we look at the effects of welfare reforms on poverty, we find that instead of alleviating poverty, it is exacerbating it. Our social welfare model is based on principles of inclusion, support and security for all—protecting any one of us should we fall on hard times, or become ill or disabled. Welfare is there to assure us of our dignity, as well as the basics of life, and to give us a hand up, not a handout; the current welfare reforms are doing anything but that.
I want to mention Rebecca, who came to see me at my surgery on Saturday. She is blind, and not only has she had her care package reduced from 13 hours to eight hours, but she is absolutely terrified about what the migration from disability living allowance to personal independence payments will mean to her. She said, “I will not see anybody from when I see you”—her personal adviser was with her—“until Monday, because of the lack of support that I am getting.” She is not alone. A raft of measures is affecting the ability of disabled people to live as normal a life as possible.
We have heard about people on employment and support allowance, and the trials and tribulations of going through the work capability assessment. One constituent on ESA, who has a heart condition, had a heart attack in the middle of going through the WCA process. He was advised to leave and he went to hospital, but a week later he got a letter saying that he had been sanctioned because he had left the work capability assessment. That is not atypical. We have also heard about the bedroom tax, with 500,000 people affected nationally. In Oldham, where 2,048 people are affected, there are only 500 properties for them to move into, which is absolutely absurd.
We still do not know the cumulative effects of all these measures. Despite the valiant efforts of the people behind the WOW—War on Welfare—petition, which has got 100,000 signatures, we still do not have an agreement on a cumulative assessment of all the different measures.
Sanctions have been mentioned. One person who came to see me had been a Jobcentre Plus adviser until relatively recently, and he told me that there is a deliberate culture to develop a sanctions target mentality. Even if people have followed everything they are meant to do, they are still sanctioned, with bogus appointments being made to set them up to fail. That is not just, and it is not what we expect of our welfare system. The implications for health and the social effects on our communities are dire. I commend the commission—
There is no doubt in my mind that poverty is increasing, and that a major factor in that increase is the vicious and misguided welfare reforms that are beginning to bite in my community. The scale of the impact of changes to the social security system is really quite staggering. As of September last year, 598 households in Newham are affected by the benefit cap, of which 75% are in the private rented sector, with all the vulnerability that goes with that. Larger households are the worst hit: 80% of them have three or more children. Three quarters of main claimants are women and more than half come from lone parent households. With an average loss of £90 a week, it is clearly families—that means children—who are suffering at the sharp end of these reforms.
Some 2,113 households in Newham have been hit by the bedroom tax, with many choosing to pay and stay in order to hang on to the family, social, school and other community networks they desperately rely on. The average loss is £16 a week. A further 25,227 households are caught up in the council tax benefit localisation and the cut to the overall amount available. The average loss here is £3.50 a week. Taking all the losses across the three categories—the benefits cap, the bedroom tax and the council tax—the loss to households in Newham each year is £8.9 million. It is obvious from these figures that such losses cannot be experienced without a serious impact on families, children and the local economy.
The danger for policy makers and politicians is that we assess the impact of these changes serially and separately, whereas families experience them collectively and cumulatively. In our debates in this Chamber over the past months, we have looked in detail at issues relating directly to this subject and to the incidence of poverty, its causes and its consequences. Food banks, zero-hours contracts, payday loans and high-cost credit are just a few, and it is worth reminding ourselves that each of these is not a stand-alone issue; they are interlinked and have a cumulative and often devastating impact on the lives of many of my constituents. Running through them all is the imminent threat of poverty, and underpinning them all is the spectre of the Government’s welfare reforms.
In 2009, there was just one food bank in Newham; now there are at least six, and at least four places where the hungry can get a free meal. The scale of provision is indicative of the scale of the problem. Newham is a place of widespread deprivation, yet it is from this community that food is collected and donated—by schools and faith groups and individuals paying a little extra as part of their weekly shop. These donations are from people who absolutely understand how difficult life is for those who have even less than they do. The poor are giving to the even poorer.
I will give an example of where a food bank stepped in to help when a failure of social security tipped Mr K into crisis. A single man in his thirties with learning difficulties and physical disabilities, his employment support allowance was suspended when he attended a medical. He had no money to live on for three months and could not afford to heat his home or pay his bills. The food bank supported him for a month with food and advice, and assured a successful ESA appeal. Mrs Y was supported after her husband disappeared, leaving her and the children alone. The police suspected suicide, but her benefits were stopped, as they were claimed by her husband. Community Links, a fabulous voluntary sector organisation in my constituency, supported Mrs Y with food until she could get her benefits transferred and reinstated. Although food banks have done well supporting people through crises, that shows how “on the edge” people actually are—just about keeping their heads above water, for ever vulnerable to the slide into hunger because of job loss, pay or hours cuts, reduced social security payments, or, as I have seen far too often at my surgeries, a blunder by the Department for Work and Pensions that stops essential support, regardless of the consequences.
It is so wrong that in the 21st century, people are forced to rely on the good will of neighbours to ensure their well-being. The community in which I live is poor but always generous. The plight of those reliant on food banks is something the commission of inquiry should investigate. I am grateful again to Community Links, which, in order to understand better how these changes are rolling out in our communities, carried out in-depth quality research into the circumstances of local people. The localisation of council tax, the benefits cap and the bedroom tax are hitting poor people indiscriminately, regardless of their needs or situation, and the people who responded to the survey felt they were being stigmatised for situations over which they had no control. There is no support to help people manage or cope with the transition, while the survey tells us categorically that people are struggling to make ends meet, cutting back on essential items—heating or eating—and prioritising paying rent, thereby exacerbating the choice between food and comfort and safety.
When we have the commission of inquiry, it must not just concern itself with the economics of the poverty figures. It must hear the human stories of the people who stand behind the Community Links research and who go to our food banks. It must consider and respond to the reality of their lives, as we in this House must address the sorry and devastating impact of the changes that are agreed to here, but that are felt acutely in the world outside.
The first question that we must ask ourselves is why we make social security payments to people. We make them because people have lost their jobs, which is a traumatic event in itself. We make them because of sickness or disability. We make them to people who are in work, but are on low incomes. Some 68% of those who are affected by the Government’s welfare cuts are in work, according to the Resolution Foundation. I will come back to those people in a moment. We make payments to prevent homelessness and to protect people from living in squalid, cold and damp conditions—conditions that will make them more susceptible to disease. We make payments to prevent malnutrition and the diseases that go with it. That is particularly important for children. Malnutrition in childhood not only affects those children in adulthood, but can affect their children. The difference in longevity between well-off areas and poor areas is well documented.
As my right hon. Friend Mr Meacher has explained clearly, we are one of the richest countries in the world and there are other ways in which we could get the deficit down. I will not spend time talking about food banks, other than to say that 50% of the people who are going to food banks are doing so because of mistakes, changes or delays in their benefits.
I want to focus on benefit rates, the Government’s policy on them and the effect that is having on people in Britain. To go back to the beginning, it is a bit of a misconception that UK benefit rates are based on a systematic estimate of minimum needs. Even from the start, back in 1948, benefit rates were a bit of a compromise between the actual needs and what was deemed to be affordable. Even by the time they were introduced, Rowntree had researched the fact that social need was an additional need to physical need. However, that was not recognised from the beginning. Although things were rather patchy until April 1975, in general, benefits increased in line with inflation. Since then, successive Governments have uprated benefits in line with inflation, mostly using the retail prices index until 2011. It is only from then onwards that we have seen the breaking of the link between inflation and the rates at which benefits rise.
Universal credit will be subject to annual review, but not to mandatory uprating. There is a huge danger that it will fall behind inflation. However, well before we get to universal credit, with its myriad problems, which are not helped by the sheer incompetence with which it is being introduced, the Government should be looking at the impact of the Welfare Benefits Up-rating Act 2013. Most working-age benefits have been limited to rises of 1% a year, and yet the costs of basic items such as food and energy—the very basics of life—are rising by significantly more. Even Government estimates suggest that there may be 200,000 more children in poverty, and the Child Poverty Action Group estimates that there could be 1 million more children in poverty by 2020.
Which benefits have been affected? Let us look at the list. The first is tax credits, which have a huge impact. We called the cut to tax credits the strivers’ tax, because it affects people who are desperately trying to make ends meet. Such people are often doing two or three jobs and patching together a few hours here and a few hours there. They are then told that they have to find more hours. Those hours simply are not available; otherwise they would be doing them.
I heard the most extraordinary statement from the Minister of State, Department for Work and Pensions, Steve Webb when we were talking about housing benefit and the bedroom tax. He came out with the absurd nonsense that two or three hours on the minimum wage would make up the £15 shortfall. Does he not understand how the system works? It is very complex and there are enormous differences depending on the family circumstances and who lives in the household, but essentially, if somebody who is getting housing benefit gets additional income, roughly 65% of it will go straight into a cut in their housing benefit. So in order to get an extra £15 a person effectively has to earn £45, and to get an extra £25 they effectively have to earn about £75. That does not take into account the transport costs to get to work and so on. That is a couple of days’ work at minimum wage at the absolute minimum, on top of the other work people are already doing—these are people who are in work.
The effect of the changes is catastrophic. What have we seen cut? Tax credits, pension credits, savings credits, the health and pregnancy grant, loan parent benefits, contributory employment and support allowance, disability living allowance and council tax benefit have all been cut, and there is the switch to CPI instead of RPI. Luckily, in Wales people have been cushioned for one year by the Welsh Government, but whether that can continue and is affordable is another matter. The impact of all those cuts together is absolutely catastrophic.
The other myth we often hear peddled is the fantastically high figures that, somewhere or other, a tabloid newspaper manages to find for housing benefit. That is because they take the example of one large family in a very expensive area of London, completely forgetting that the family does not receive that money—it goes straight into the pockets of a greedy landlord. That is one of the significant contributors to a high housing benefit bill.
As our shadow Secretary of State for Work and Pensions has said clearly, and has been quoted today as saying, we will get the benefit bill down. How will we do that? We will put people back to work, we will ensure that the national minimum wage keeps up with inflation and we will bring in measures to encourage employers to introduce the living wage, through tax breaks in the first year of its introduction. Frankly, we could make £3 billion of savings simply by helping people to earn more and pay more tax. They would then not need as much in the way of tax credits. We will have a house building programme that will put people into social housing at more sensible rents, thereby reducing the housing benefit bill. We have already seen how a two-bedroom house in the private sector can be far more expensive than a three-bedroom house in the social sector.
There is so much we could be doing. In this motion, we ask for a commission to look at the impact of poverty because we are very concerned that not just this generation but generations to come will be affected by the dreadful conditions and poverty we now see spreading across the UK.
The question was asked earlier about how we pay off the deficit. There was a choice when the economic crisis hit: should those who created the economic crisis pay for it, or should the others? This Government decided that the poorest in our society would pay. To enable that to happen there had to be some form of ideological attack on the poorest—the latest example is the programme “Benefits Street”—that identifies a group of people and demonstrates that they somehow stand for all those people who are dependent on benefits. That is then used as a justification to cut benefits overall.
The reality, as has been said time and time again, is that some of the people suffering hardest are those who are in work. In two weeks time in this city, the BAFTAs will be hosted again at the Royal Opera House. That weekend, the cleaners will be on strike and picketing outside. I will be joining them, because they are on just above the minimum wage, not on a living wage, and cannot afford to live in the city in which they work. A whole range of constituencies outside London have been mentioned. London and the south-east have an image of wealth, with gold pavements and so on, but there is a growing underclass in London of people in dire poverty.
The anxiety and anger we have is that in two weeks the cleaners will go on strike because they have no other option. They are trying to get their employers to negotiate a London living wage, while this week the bank bonuses will be announced. Goldman Sachs has already explained that it looks like it will have a bumper year. We are back to pre-crisis bonus levels. I raised this with the Chancellor and, to give him his due, he actually said that there is an issue that we have to address. We have been told that in one company the average bonus payment is £2.7 million per member of staff. This is the contrast we have: people in work are struggling to just maintain a roof over their heads, feed and clothe their children and have a decent standard of income. At the same time, we have the profligacy and obscene levels of bonuses returning. I think the choice was made under this Government that the poor would pay for the crisis, not the rich who caused it.
Examples have been given of the range of cuts that have been made. I will be frank: I do not know how people in my constituency survive on the income they are getting. I have no idea how they can afford to live on the minimal income that they are getting. We will have a debate in a few weeks’ time about the WOW petition and people with disabilities, who are among some of the hardest hit. However, the latest statistics show that we have 13,000 children in my borough living in poverty, and it is a relatively wealthy borough. We are a working-class area with high levels of employment and, usually, not bad levels of income, but even in my constituency we are seeing child poverty on a scale that we have not seen since the second world war, with all the problems associated with that.
One of the main problems has been touched on by others: the fact that people cannot afford a roof over their heads. House prices have gone through the roof. People cannot afford them on the incomes they are getting, but what do the Government do? They increase rents in the social sector—in council housing and social housing—and at the same time cut benefits. The argument put forward by the Government—it has some logic to it—was that if they cut benefits, somehow the landlords would stop charging higher rents, but the reverse has happened. Rents have gone up in my area. Getting a three-bedroom property in the private rented sector means spending between £1,200 and £1,600 a month, and we are not talking about high standards of property. We are just talking about the roof over people’s heads.
When people go to the council, the discretionary money that has been awarded does not meet the difference between the loss of benefits and the rents they are now being charged. What is happening, therefore—this is the irony of it—is homelessness on a scale that we have not seen for perhaps two decades and children living in bed and breakfasts again. We were promised that that would never happen again, and it is happening. Children are living in appalling conditions in bed and breakfasts, and then they are farmed out round the country, which completely disrupts their education and breaks down the connections with their wider family. That destabilises whole families as well, because people under that pressure begin to implode. It is therefore no wonder that we have family breakdown increasing in many of our areas as a result of the financial pressures that people are under.
That is the result of a whole series of reforms that have been introduced as part of an incremental development to attack the poor. Those of us on the Labour Benches should say: “No more. That’s enough now.” We are the people who invented the welfare state. We introduced it—working, yes, with Beveridge, the Liberals and others. It was not just to provide a safety net; it was to give people the opportunity to achieve their life chances. This Government are destroying that opportunity for people to thrive and enjoy the life chances that we wanted to give them.
I am not sure whether the hon. Gentleman was here under the last Government, but I was one of those who argued for a massive redistribution of wealth to tackle poverty in this country, and I will continue to argue that point. I do not think that any of the parties should get into this Dutch auction about who can be more brutal towards the poor, but from the detail of the policy being advocated by the Opposition that I have heard, it is about achieving growth, getting people back into employment, ensuring a fair system of redistribution of wealth in this country and—this is the point my right hon. Friend Mr Meacher made—ensuring that people pay their taxes. At the moment we are living in a corporate kleptocracy, where corporations steal and rob from us through tax avoidance and tax evasion. If we could have some of that back, not only could we tackle the deficit, but that redistribution of wealth could take place and we could lift people out of poverty, provide the homes they need and give them back the life chances that this Government are stealing from them.
Like all other speakers, I am grateful to those who lobbied for this debate.
There is a need for some good research into what is going on—research that would very much form part of a commission. I want to give an example of research started by the previous Government that is not being conducted by this Government—in this case, research into the employment and support allowance and the work capability assessment. The last Government commissioned research into what happened to people who had been found fit for work. After three months, 22% were back in employment and 41% were on another benefit. There were still some missing people, but there was no explanation of where they were. After a year, only 23%—there was hardly any increase—were back in employment. However, 43% of those people were neither in employment nor on any other out-of-work benefits. Now 43% is an awful lot of individuals, but this research stopped so we do not know what has been going on since; we do not know whether the pattern has been consistent over the last few years. If it is the case, there are a lot of unexplained outcomes in respect of people living in great poverty.
This issue is not just about people who have somehow been benefit dependent for all their lives. Professor Fothergill of Sheffield Hallam university recently gave evidence to the Work and Pensions Select Committee, and he pointed out that some of those most affected are couples in their 50s. Typically, people will be affected most by becoming ill at that stage in their lives, when illness really does begin to rack up and benefits for illness are most likely to be received. What happens if, say, a couple has one and a half incomes and has been comfortably off with the children grown up and a reasonable income coming in, but the main earner falls ill? There will be an immediate big loss of income because of the illness in itself. After a year, if that individual goes into the workplace activities group, which many do, they will lose even their employment and support allowance. At that stage, another £91 is lopped off their household income—and all this at a time when the costs are probably increasing because they are likely to be at home longer and have more heating bills to pay.
If this couple are council or housing association tenants, they might well have a spare room and will also be hit by the bedroom tax. The second means test applied by many councils for discretionary housing payments will probably mean that, because there is still an earner in the household—albeit probably a part-time earner—they will not qualify for discretionary housing payment. They will be deemed to have sufficient income over the absolute basic amount for them to have this extra payment. After working for 35, 40 or perhaps even more years, this couple will have experienced a huge tumble from being comfortable to being in really straitened circumstances. If they have made any savings over their working period towards their retirement, the chances are that when they reach pension age, they will have been entirely eroded, creating further problems for the future.
The irony in all this is that many of the measures introduced—I would hope that the research would cover this issue—are not actually making any great savings. We have heard a lot about the bedroom tax not making much in savings, but it is not the only thing. Housing benefit payments are due to increase, which the Office for Budget Responsibility has factored into its assessment. Why? Because half the expected increase—a substantial increase—is due to people in employment who will qualify for the benefit. Fewer people may be receiving jobseeker’s allowance at one end of the system, but further along the system, more will receive housing benefit. For one set of savings, there is a comparable set of costs. We have to look at that.
We are not making the savings we think we are, and I believe the same is true of the employment and support allowance. There is a big mystery here. The number of people in receipt of that sort of benefit has gone down by far fewer than the number of people who have been found fit for work. What on earth is going on? I suspect that many people have simply come around through the system again. They were not well; they had to apply for benefit again. We are putting people through a lot of trauma and stress for very little saving.
I am glad to have the opportunity to say a few words. I wanted to speak in the debate to make the point that the crisis caused by the Government’s welfare reform policies is affecting constituencies up and down the length of the country and is affecting all types of constituency. My constituency comes out about average on the statistical lists of poverty, employment, unemployment and wealth in the UK. We have some areas of high wealth with wealthy individuals, but other areas, and some individuals living in the generally richer areas of the constituency, are suffering from the effects of Government policy in a way that has not been seen for a generation. That experience is evidenced by the growing demand for and reliance on food banks, soup kitchens and other outlets that provide free food. One such food bank was opened in my constituency last year, and another is under way. Another six, seven or eight organisations provide support of various kinds which enables people to survive from day to day, but, given the shortage of time, I shall not list them all.
As many other Members have pointed out today, food banks are a symptom of a wider problem. People depend on them for a host of reasons. Sanctions are one of the most important, but others are the delays and mistakes caused by all the changes and complications that the Government are increasingly imposing on those who rely on benefits, and the effects of their economic policies, such as the need for people to rely on part-time work when they want to work full-time.
Another reason is the bedroom tax. I want to say a little about what is happening in my city of Edinburgh, and also to explain why I think that a commission of inquiry would be a good way of at least trying to inject some sense into the attitudes that were expressed during DWP questions earlier today. It appears that most members of the coalition believe that numerous people living in large houses are desperately avoiding moving to smaller houses, and fighting off all the people who are trying to move into the larger houses. In fact, that is happening almost nowhere in the country. In my constituency, many people who live in under-occupied houses are in houses for which there would not be a great demand if they became vacant.
Above all, in Edinburgh and elsewhere, the number of people who could possibly qualify for smaller, one-bedroom accommodation is vastly greater than the number of such homes that are available. According to a figure that I saw a few weeks ago—and I have no reason to believe that it has changed since then—more than 3,000 people were living in under-occupied housing, according to the Government’s definition, and a further 14,000 were on the waiting list for one-bedroom houses.
In that week, only 24 one-bedroom homes were available in any part of the council or the social housing sector. A commission of inquiry might at least get some awareness of the reality of the situation into the minds of Ministers and Government Back Benchers.
I suspect that when the House votes on the motion, Government Members who have not been in the Chamber for the debate will come flooding in to defeat it. Perhaps the Minister will surprise us and tell us that the Government will allow the motion to be passed, but I suspect that that will not happen. However, given that this is a Back-Bench rather than a Government or an Opposition motion, I hope that at least some members of the coalition parties will show the humanity that others have shown today. I hope that they will recognise that there is a problem whose extent needs to be assessed, and will stand along with those in the Chamber and outside who are prepared to speak up for the people who are suffering as a result of the inhumane policies of this Government.
I warmly congratulate my right hon. Friend Mr Meacher and the Government Members who signed the motion, not least because they have given us an opportunity to hear some of the most insightful and moving speeches that I have heard for a long time in the House. It is a shame that nearly all of them had to be made by Opposition Members because so few Government Members turned up to speak, but I am sure that Government Members had other interesting things to do. I should add that I thought that the speech of Jeremy Lefroy was insightful as well. It had barely a partisan bone in it, and I commend the hon. Gentleman for the views that he espoused tonight.
Let me begin by listing some facts on which I hope we can all agree. We all believe that the best route out of poverty is work, that those who can work should work, that those who need help to work should receive that help, that a civilised nation cares for the vulnerable, that at times we may all need the support of the state to get back on our feet, that a strong national health service, free at the point of delivery, is a key part of getting people back into work, and that education cannot stop at 16 or at 18 or, for that matter, at 21 if people are to acquire the skills that they need in order to prosper in a fiercely competitive world.
As Labour colleagues have been referring to what we will do when we form the Government in 2015, the Minister has, on several occasions, been heard chuntering, “Oh yes, the shadow Secretary of State says you’re going to be tougher on welfare.” We are, because we know that the best way to be tough on the welfare budget is to get people into work. We are absolutely determined that we will not do what this Government did immediately on coming into power in 2010, which was, without a shred of evidence, to abolish the future jobs fund that was giving young people an opportunity. We will do exactly the opposite. We will bring in a jobs guarantee for every under 24-year-old, because we have seen what is happening in Wales where a new scheme has been brought in to replace what this Government have been doing and that has put 7,748 young people into work. Some 80% of those jobs are in the private sector and 96% of those who have gone into those jobs have then gone into full-time employment. That is being tough on the welfare budget—not being tough on the recipients of welfare, but being tough on the welfare budget—and that is exactly what we intend to do.
We all know that there are areas of the country that have suffered deprivation for decades. Those are the places—in particular, the mining, shipbuilding and iron and steel cities and towns of this country—where one industry flourished, dominated and then died. That is what many of the speeches this afternoon have been about. However, the indices of deprivation come not single spies, but in battalions. All too often, with poverty comes poor housing, poor educational attainment and poor diet, as well as high levels of long-term unemployment, disability, mental health problems, obesity, malnutrition, teenage pregnancy, ischaemic heart disease, type 1 and type 2 diabetes and also, therefore, blindness. The poor die younger and are more likely to die of their first coronary or their first stroke. They are more likely to be the victims of crime, especially violent crime. Each of those problems exacerbates the other, so we have a vicious circle of poverty with children trapped by their parents’ opportunities or lack of ambitions. In short, all too often poverty is hereditary in Britain—as hereditary as the monarchy or, for that matter, a place at Eton.
The image that those on the right would have us all subscribe to of those living in poverty is far from the truth. Often the poor work the hardest, at the least hospitable hours, with poor protection and for paltry pay. Frequently, as many Members have said, they take several jobs to be able to pay to put food on the table. They travel for hours to work because they cannot afford properties in expensive places where there are more jobs. Because they take pride in the ability to stand on their own two feet, they often refuse to claim all they are entitled to or to accept charity. We should applaud them, not denigrate them.
When the Secretary of State came to Merthyr Tydfil and told everybody that the answer to their problems if they were out of work was to get on a bus down to Cardiff, he simply did not know the facts. First, there are not buses that will get people to Cardiff in time for most jobs on low pay that start very early in the morning. Secondly, if they are going to be doing shift work, they cannot possibly rely on buses to get them to work. Thirdly, there are eight people applying for every job that is available in Cardiff so the situation is not much better than in Merthyr Tydfil. Most importantly, if people are spending half of their daily wage every day on getting on the bus to work and getting back home, the likelihood is that they are not going to be able to make work pay. That is what we need to change: we need to make work pay.
There have been massive changes in welfare in this country since 2010, especially since the Government changes to welfare came in last summer. Food prices have risen far more on average than those of other goods, and that has hit many poor families. According to Which?over the last six years food prices have risen over and above general inflation by 12.6% and nearly half of consumers now say they are spending a larger proportion of their available income on food than just 12 months ago. Six in 10—60%—are worried about how they will manage their future spending on groceries if prices continue to rise, and it looks as though they will. It must surely be shaming for this country that, between April and September, more than 350,000 people—150,000 of whom were children—received at least three days of emergency food from Trussell Trust food banks. That represents a threefold increase on the same period last year and a dramatic rise from 2009-10, when just 41,000 people received food aid. Contrary to what John Hemming said, the Trussell Trust has stated that
“rising living costs and stagnant wages are forcing more people to live on a financial knife edge where any change in circumstance can plunge them into poverty.”
That is precisely what the Government’s welfare changes have done.
In March last year, Ministers in the Department for Environment, Food and Rural Affairs commissioned research into food banks and promised to publish the results last summer. The Government have had the results of the review since last June and, bizarrely, have now been reviewing them for far longer than it took to write them. I do not know whether they need educational assistance to read the report and present it to the public, but it is about time we all saw the findings that they have had in their pocket since last June.
The Trussell Trust has reported rising food bank use due to the bedroom tax, and states that 35% of its clients were referred due to delays in receiving benefits. There is no way out of this; the Government cannot avoid responsibility. Yes, charities are picking up the difference, but that is not the kind of society we should be living in. On top of that, the National Housing Federation, which represents housing associations, said that a survey of 51 of its biggest members found that more than half their residents affected by the bedroom tax—32,432 people—were unable to pay their rent between April and June last year. Contrary to all the rumours put out by The Sun, the Daily Mail and The Daily Telegraph, the survey shows that a quarter of those affected by the tax had fallen behind with their rent for the first time in their lives. That is not their fault; it is the Government’s fault.
One report, the Real Life Reform report, interviewed 74 households in the north of England last July, three months after the changes came in, then again three months later. In September, it found that over a quarter of the people in the survey reported having less than £10 a week to live on once rent, food and bills were accounted for. The report also found that 37% said they had no spare cash at all, and that families were spending an average of just £23 per person a week—or £3.30 a day—on food. Those were people in work, and for those with school-age children, £1.80 of that daily allowance was going towards a school dinner. Households were spending an average of £26 a week on gas and electricity, which equated to 10% of gross income. That was in July, not during the winter months when the costs would be much higher.
Three months later, that same survey found that the number of households spending less than £20 a week on food had increased from a quarter to a third, that the number of people having no money left each week had risen to 51%—more than half—and that the average spend on food per person per day had gone down from £3 to £2.10. It also found that households were spending 16% more on gas and electricity, taking them into fuel poverty. In addition, 33% of respondents now had council tax debt as well.
The loan sharks are flourishing, the number of those in fuel poverty is rising and the number of homeless people is rising. The number of those relying on charity to feed their children is also rising, and the number of those wanting to work more hours is at a record high. And for the first time ever, the number of those in work and in poverty is higher than the number out of work. The number of those in debt, in arrears and in despair about their finances is rising. Even Sir John Major knows that more and more people this winter have been choosing between heating and eating. It feels as though a worldwide economic crunch, manufactured in the boardrooms of Wall Street, on the executive floors of international banks and on the trading floors of the City of London, has been visited on the most vulnerable in our society. Those who struggle to buy shoes for their children have paid the price of austerity, not the well-heeled. We should be ashamed; the Government should certainly be ashamed. This is why we need a commission of inquiry.
Apart from a short comfort break, I have sat through the whole debate, finding it very interesting. I found the tone and manner of most of it to be exemplary, and a credit to the House and the Backbench Business Committee. I will take exception with the Opposition Front-Bench team, because if they were so determined that they wanted this they could have had this debate and pushed for this inquiry during Opposition day debates last week or later in this week. They could even have signed the motion tabled by Mr Meacher, but they did not; there are three names on the Order Paper, but none from the Front Bench. They have suddenly decided—[Hon. Members: “It is a Back-Bench debate.] So why did we have the debate last week? What about the business next week? They have not done it.
Let us not get into the semantics of what went on but look at what happened during the debate. [Interruption.] For someone who sits there and complains about other people chuntering from a sedentary position, I must say that Chris Bryant is the leading expert in it. We heard contributions from: the right hon. Member for Oldham West and Royton; my hon. Friend David T. C. Davies; Mr Winnick; my hon. Friend Jeremy Lefroy; Steve Rotheram; my hon. Friend John Hemming; Chris Williamson; my hon. Friend Sir Peter Bottomley; and the hon. Members for North Ayrshire and Arran (Katy Clark), for Rochdale (Simon Danczuk), for Oldham East and Saddleworth (Debbie Abrahams), for West Ham (Lyn Brown), for Llanelli (Nia Griffith), for Hayes and Harlington (John McDonnell), for Edinburgh East (Sheila Gilmore) and for Edinburgh North and Leith (Mark Lazarowicz). As I say, it is a credit to the Backbench Business Committee that it listened to the Back Benchers and tabled this debate.
The contribution from the right hon. Member for Oldham West and Royton was wide-ranging. I am pleased that he did not place all the blame on the coalition Government, not least because he was aware that the work capability assessments were introduced by the previous Administration, as was the Atos contract, which we discussed at Work and Pensions questions. So we inherited the assessments that are being complained about by hon. Members from across the House today, particularly those being carried out by Atos. We are working hard to improve the situation and deal with the mess we inherited.
I would like to know how it is possible that we are making it worse, as the contract we are working to is exactly the one we inherited. The hon. Member for Derby North, from a sedentary position, asks why. We were trapped in this because the previous Administration signed the contract. We need to make sure that the work capability assessment works as we go forward.
I will not give way, because I do not have time.
My hon. Friend the Member for Monmouth raised the most important issue, and I am pleased that the shadow Secretary of State is here now. The shadow Minister engaged in a rewriting of history. My hon. Friend and several others alluded to the fact that the shadow Secretary of State said that Labour would be tougher than the Tories on welfare and on welfare reforms. There was no nuance about helping more people. Labour said it would be tougher than the Tories on welfare. We have saved £83 billion on welfare spending—that is the predicted saving. I would like to know where those cuts would take place if not through welfare reform. [Interruption.] Ian Mearns says from a sedentary position that the cuts would come through jobs, but more than 1 million people have been placed into jobs since this Government took office. That is most important.
I will give way to the hon. Lady because she has sat through the whole debate without having an opportunity to speak, and it is a credit to her.
Before the Minister came into his current job, he was a very effective Minister in Northern Ireland. He will know, therefore, that in Northern Ireland we have had an increased threat from dissident republicans, who are deeply and utterly ruthless. Would it not be worth while to extend this proposed commission to Northern Ireland? I hope that those who have proposed it would support that, but that is a point that could be clarified later. If the commission were to be granted, we could have a worthwhile review of and inquiry into whether deprivation and poverty in Northern Ireland have fed into the increase in dissident violence. Would that not be worth while?
I thank the hon. Lady for her intervention and for her comments about my time as a Minister in Northern Ireland. That means an awful lot to me. Most of the welfare reforms have not been implemented in Northern Ireland yet because they are being blocked by one particular party, so it is difficult to see how we could appraise what was going to happen in Northern Ireland compared with the rest of the United Kingdom because the welfare reforms have not been introduced there in the way that they have in the rest of the country. I do not think that the answer at this stage is to have an independent review. The Government issue huge amounts of research—very expensive research—and we need to look carefully at what is going on.
We have of course brought in the benefit cap and reformed housing benefit. My constituency has one of the largest council-run social housing stocks in the country—nearly 16,000 council properties—as well as quite a large housing association stock. I get family after family saying to me, “Why do my children have to do their homework in the corridor? Why can’t we move into a larger property.”
From a sedentary position, the hon. Gentleman says build more houses. Absolutely. His party had 13 years to do so. The housing situation has not suddenly occurred in the last five minutes. Labour did not do it when it was in Government, and yet it wants to rewrite history this evening. That is not possible and it will not happen. We need to ensure that we have fairness in the system. I have listened carefully to Members throughout the debate. The system has to be fair for both sides. It has to be fair to the people who are working and to those who are on benefit.
Earlier in the debate someone mentioned the Channel 4 programme. The idea of Channel 4 being supportive of this Government would be a shock to the system and to Channel 4. I was brought up in a working class area in north London, and, as I have said, I have two estates in the top 10% of the most socially deprived areas, but I was shocked by what I saw.
Whether or not it is a fair representation is a matter for Channel 4. Like the rest of the country, I sat and watched the programme. I have not said anything about it, because I do not know the facts. I will go and see what is happening on the ground rather than speaking in generalisations. Channel 4 is not in any way a mouthpiece for this Government. It has been hugely critical of what we have been doing.
I will not give way, because I want to make some progress. I did not intervene on the hon. Gentleman, so he will have to understand.
The hon. Member for Birmingham, Yardley made an important point about people who have moved from employment and support allowance to jobseeker’s allowance. It is enormously important that they know what benefits they are entitled to. As I said to the Work and Pensions Committee the other week, I will look carefully at the decision letter they get when they are told that their ESA has been stopped and what they are able to claim. That is a simple way to ensure that they understand the benefits they are entitled to and that families are not short of money.
The hon. Gentleman was the only Member to raise the issue of the minimum wage. The debate about what it will be raised to is taking place now. We will wait to hear what the independent review says. It is an important debate for people who are in work but require help from other benefits.
My hon. Friend the Member for Worthing West gave a wide-ranging speech. I will have to write to him about when the credit unions will be able to charge monthly interest. I have been a member for more than 12 years, and believe that the credit unions make a very important contribution to our communities. In particular, they stop that man with a threatening look from knocking at the door on a Friday night, just after pay day. All of us who have grown up on such estates have had that frightening experience. In many ways, the credit union can really help with that problem.
The hon. Member for North Ayrshire and Arran talked about discretionary payments and the fact that people have to apply again and again. There is nothing in the rules that says it should be for three months or for any other time scale. It is plainly obvious in many cases that an individual will be able to receive the payment for the long term and that the local authority should be able to rule on that. As we said at Question Time today, most local authorities are not using all their discretionary payments, and those that have can apply for extra payments under the scheme. We are looking forward to seeing how we can take that forward to ensure that we can give those assurances to local authorities. It is important that when Members go back to their constituencies they speak to their local authorities about what they should be doing, because there is no rule on the matter. My own local authority is using the three-month rule and there is no need for that in many cases. Local authorities should look at individuals rather than the numbers.
The hon. Member for Rochdale made an important speech and a good contribution to the debate, not least because he accepted from the outset that welfare reform is imperative. I was slightly concerned during his speech by the idea that if we are not careful, we might start thinking that all welfare reform will have a massive effect. In many ways, welfare reform can have a beneficial effect on people, particularly those who have been out of work for a considerable amount of time and, thinking of my portfolio, those who have disabilities or long-term illnesses and have not been able to get back into work. For instance, the Access to Work programme is often the key to getting those people back in to work. It is important that we understand how the different schemes work and that hon. Members ensure that there is understanding in their constituencies.
The hon. Member for Oldham East and Saddleworth talked about bogus appointments. I would love to know about that and how it happened, so perhaps we can meet after the debate. It is obviously fundamentally wrong for bogus appointments to be made and for people to then be sanctioned. It would be much appreciated if she or any other hon. Member could help us with such issues.
The whole debate has been sensible, apart from the contribution of the shadow Minister, who is chuntering away again, ruining the quality of the debate as usual. It is important that the Backbench Business Committee can introduce such a debate. If the Opposition Front
Benchers had wanted it so much, they could have introduced it in their own time. We should let the House decide this evening.
This has been an excellent debate, one of the best that I have attended. The evidence from all parts of the House about the impact of the Government’s welfare reforms on poverty was both compelling and systematic. Except for the Minister, at the end, it was relatively free of tribalism.
There was little disagreement about the need for a commission of inquiry, with an emphasis on the 4 million children growing up in poverty. Jeremy Lefroy, in a considered speech, said that the bedroom tax should be, if not abolished, at least conditional on enough social housing being built and that sanctions for technicalities are totally intolerable. I am grateful to him for saying that. We heard about the level of debt standing at 40% in Liverpool, and I am sure that the same applies in many other cities. We also heard evidence from John Hemming about a range of issues that must be considered in detail, not just in terms of the framework of policy. I agree with that.
We heard a passionate speech about the housing crisis, the catastrophic drop in Government investment in housing and the price-to-income ratio that puts housing totally out of the reach of poorer people. We heard about the damaging effects of the Government’s switch—convenient to the Chancellor, of course—from RPI to CPI and that the loss of a discretionary social fund was forcing people back into the hands of loan sharks. We also heard about the DWP staff culture of looking for targets to achieve sanctions. Those are all important points.
There were significant disagreements. David T. C. Davies gave, I think, the traditional Conservative response, as one might expect, giving the Chancellor the overriding right to pursue an austerity policy irrespective of the impact on ordinary people. My hon. Friend John McDonnell strongly opposed that because of the Government’s choice to put the burden on the poor.
I hope that all Members of the House will support the motion, because we need a commission of inquiry.
On a point of order, Mr Speaker. We have just had a very important debate and a very decisive result—the House has spoken strongly, by 125 to two. I do not think that anyone could deny that this is a critically important issue. Can we therefore be assured that the Minister will respond, either now or tomorrow, in order to answer the fact that Parliament has decided and the Government should take note?
I am grateful to the right hon. Gentleman for his point of order, but it is not a matter for the Chair. If the Minister of State wants to respond, he can, but he is under no obligation to do so. [Interruption.] No, the Minister does not wish to respond. The right hon. Gentleman’s point stands on the record.