The covid pandemic has exposed and exacerbated an already broken economic system that is rigged in favour of the wealthy while eroding workers’ rights and remuneration. The system is broken.
My constituency of Cynon Valley is a case in point. The local authority has endured £90 million of Tory Government cuts since 2010 and austerity. Some 23% of the population are living in poverty while child poverty rates are even higher—at 35%. Alongside that, we are one of the areas that have been hardest hit by the coronavirus like other of the poorest communities elsewhere in the United Kingdom. We have one of the highest rates of covid and of death from covid in Wales and, in certain points, one of the highest in the UK. Tory austerity measures have left people in my constituency poorer and therefore more susceptible to the virus.
Since the 1980s, we have experienced the demise of traditional industries and unemployment rates have risen sharply recently. A quarter of the workforce have been furloughed and workers are fearful for their future. Figures for universal credit claimants have almost doubled this year and they are above the UK average. The future is also bleak for our young people. The number of benefit claimants doubled between March and July this year.
The UK Government’s original furlough scheme was welcome and did provide a lifeline for many businesses but it fell short of what was required. The Chancellor’s belatedly announced job support scheme is woefully inadequate and is applicable only to certain groups. We have done things differently in Wales and the Labour-led Welsh Government have put in place an extremely generous package of support for businesses—the best in the UK. This includes the economic resilience fund, which is providing further grants to enable businesses to adapt to post-covid realities, to support the foundational economy and to assist businesses adversely affected by the local lockdown.
But the purse strings remain with the UK Government, and that places severe constraints on what we can achieve in Wales. The current arrangements between central Government and Wales are insufficient to meet our needs. We need a genuine four-nation partnership approach not only to eradicate the virus from our country—it can be done, because other countries such as New Zealand have done it—but to develop the right economic strategy and end the poverty trap that damages so many communities and individuals both financially and in terms of health. We need to end the dead hand of financial inflexibility from the UK Government so that the Welsh Government can carry over moneys from one year to the next and ease borrowing limits.
The current situation is not an inevitable consequence of the pandemic; it is the result of a political choice. With the UK entering the worst recession of any OECD country with estimates as high as 4 million unemployed, action is needed now and I urge the Government to stand by their commitment to do whatever it takes and provide an economic package that will cater for everyone. This could include reforming the job support scheme to reimburse everyone at 80% of wages or higher, provide sector-specific support, provide support for specific groups and end precarious working arrangements. Alongside that, we desperately need welfare reform to provide a safety net, and we can begin by reversing the £30 billion cuts in the social security budget since 2010.
We can afford that by taxing wealth. It is estimated that if wealth were taxed at the same rate as income tax, it would raise £174 billion a year. In 2008, the Government paid £500 billion to bail out the banks. We can do this if the political will is there. Do this Government have the political will to act to help people in communities like mine or will they continue to help the millionaire cronies with juicy contracts so they can profit—