In-work Poverty

– in Westminster Hall at 4:30 pm on 28 June 2023.

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Photo of Tan Dhesi Tan Dhesi Shadow Minister (Transport) 4:30, 28 June 2023

I beg to move,

That this House
has considered in-work poverty.

It is a pleasure to serve under your chairmanship once again, Sir George. I am grateful to have secured this important debate on the scandal that is in-work poverty. Such a debate should not be needed in the 21st century in one of the wealthiest nations in the world, and yet here we are. I hope the debate will explore why so many people face unacceptable levels of poverty not when they are out of work, but while they are working and earning a living.

“If you work hard, you can earn a decent wage, buy a house and raise a family”—that is the promise the Government made to the country in their last election manifesto when they stated:

“We will help people and families throughout their lives by bringing down the cost of living and making sure that work always pays.”

I do not think it is controversial to say that I agree with that. People who work hard should be able to earn a decent wage, afford a home and raise a family. A job that pays, a home of their own and a family they can support are not great gifts bestowed by a generous Government; they are key indicators of a healthy and functioning society. They are our modest expectations and reasonable aspirations, and any half-competent Government should be expected to deliver them. Cruelly, over the past 13 years, this Conservative Government have not only failed to do their job and deliver for the British people; they have also, systematically, through either incompetence or intention—probably both—prevented millions across the UK from getting on in life, trapping them in an inescapable cycle of poverty and hardship.

Data from the Department for Work and Pensions shows that one in five people in the UK were in relative poverty in 2021-22. It is clear that working does not preclude a family or an individual from poverty. After housing costs, 71% of children and 57% of working-age adults who are in poverty are in poverty. In-work poverty has increased by a shocking 1.5 million people since the Conservatives took office in 2010. There are three overarching reasons why things have become so bad: earnings, housing and the cost of living. On each, the Government have taken a bad situation and made it much worse.

Wages today are at the same level as in 2005. That is the longest period of stagnation in terms of earnings in nearly 200 years. Public services have been cut to the bone, and many public sector workers have seen their pay significantly eroded by years of below-inflation rises. At the same time, there has been an explosion in the gig economy and other insecure work—a damning indictment of the Tories’ economic and political choices, which have forced ever more people to rely on the benefits system.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Levelling Up)

I congratulate the hon. Gentleman on securing the debate. He mentions the gig economy. Three of the reasons for in-work poverty are insecure work and zero-hours contracts, bogus self-employment and low wages. The Government made promises in response to the Taylor review eight years ago, but we are still waiting for that employment Bill. Does he agree that we need that employment Bill now?

Photo of Tan Dhesi Tan Dhesi Shadow Minister (Transport)

I could not agree more. I remember standing in this very place after I had managed to secure a debate on the Taylor review of modern working practices. In fact, some of the same Members who are here today also took part in that debate, during which we asked for the employment Bill to be introduced. It is shocking that only seven of the 53 agreed areas of legislation were enacted. Such intransigence is what leads to more in-work poverty.

For 13 years, successive Conservative Governments have sought to undermine social security in our country. Universal credit is not protecting working families from poverty. More than a third of children and working age adults in working families in receipt of universal credit are still in poverty after housing costs.

Ms Clarke, one of my constituents in Slough, is a nurse who supported the most vulnerable during the covid-19 pandemic. She is struggling to pay for the loans that she took out for her training and has to claim universal credit. For that, she must take annual leave to attend her appointments at the jobcentre. How is any of that fair or right? She is a nurse and a single mother without the support she clearly requires.

Photo of Sharon Hodgson Sharon Hodgson Chair, Finance Committee (Commons), Chair, Finance Committee (Commons)

My hon. Friend is making an excellent speech about in-work poverty. Does he agree that universal free school meals would help alleviate in-work poverty for those at the lower end of the wage spectrum? They are already available in primary schools in Scotland and Wales, and the Mayor of London has announced that they will be extended to primary schools across London. Northern Ireland has a higher earnings threshold of £14,000, which is double the England threshold of £7,400. Does my hon. Friend agree that that would provide a massive boost and really help those people in work who are in poverty, especially the lady he has just spoken about?

Photo of Tan Dhesi Tan Dhesi Shadow Minister (Transport)

My hon. Friend is a doughty champion for free school meals. She is known as the all-party parliamentary group queen and has organised various events, including on free school meals. I remember highlighting their importance as we served them alongside dinner ladies and gents. I thank my hon. Friend, because I will bring home that point of view later in my speech.

The punitive benefits system is driving more people to use food banks. At Slough food bank in my constituency, kind and amazing people who undertake much-needed selfless service report that six in 10 of the people they support are on universal credit, and many of them are employed. Charities openly acknowledge that they would rather not exist because they do not want a society where working people are forced to rely on food parcels to survive.

It is worth noting that in 2010 the Trussell Trust operated only 35 food banks. Staggeringly, today that number is closer to 1,300 across the UK, and between April 2022 and March 2023, they gave out 3 million emergency food parcels. That is a third more than during the pandemic and double the number before the pandemic. What a shocking legacy this Government are leaving behind.

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Digital, Culture, Media and Sport)

I congratulate my hon. Friend on securing this important debate. In Barnsley we have seen a tripling of demand for food banks. As he rightly points out, we did not have any 10 to 15 years ago. It is because of the Government that, sadly, 35% of kids in Barnsley are growing up in poverty and families are relying on food banks. They are in work but cannot afford to pay their bills.

Photo of Tan Dhesi Tan Dhesi Shadow Minister (Transport)

My hon. Friend has eloquently explained what the experts across our country are explaining: this is happening before our very eyes and we should not allow the situation to deteriorate any further.

As many will know, housing is a huge and growing driver of in-work poverty. Thanks to the Government’s failure to build enough new and affordable homes and new social housing, last year the gulf between price of houses and earnings in the UK was the worst since 1876. We really are back in Victorian times under this Government.

One of my Slough constituents privately rents and wrote to me for help. As many other private renters have experienced, they have been served with a section 21 no-fault eviction notice. Their partner works full time, but they themselves cannot work full-time hours because they have cancer. High rent costs mean that they cannot now find anywhere that is affordable. Although the family are on universal credit, it does not cover the basic cost of living. Even if they did find somewhere with an affordable rent, the need for a large deposit and a guarantor has erected huge barriers to finding new, long-term accommodation.

The supply of social housing has continued to plummet. The Government’s promise—cancelled, then reinstated—to build 300,000 new homes each year has not materialised. As my right hon. and learned Friend the Leader of the Opposition said at Prime Minister’s questions today, house building has collapsed and the Government are nowhere near their target, which means that more people are trapped in private rented accommodation as rents go through the roof. In turn, that means that people are taking longer to save for their first house. That is why levels of home ownership are down and private renting is up. Those who have been fortunate enough finally to buy a home after years and years of saving now face mortgage misery the likes of which we have not seen in generations or perhaps longer, thanks to this Government’s inability to get to grips with inflation.

Perhaps if Ministers were more focused on supporting those impacted by their child benefit cap than on removing the cap on bankers’ bonuses, and more focused on spending public money to invest in our public services than on giving away billions in failed personal protective equipment contracts to their mates and cronies, our economy would be in a much better place. Sadly, so many people are in dire straits. On top of stagnant earnings and unaffordable housing, we have a cost of living crisis, driving ever more people into in-work poverty. With food prices soaring and energy and utility bills going through the roof, many working people find themselves unable to put meals on the table, heat their home, pay their bills or provide for their families.

Photo of Daniel Poulter Daniel Poulter Conservative, Central Suffolk and North Ipswich

The hon. Gentleman will not be surprised to hear that I have a slightly different interpretation of some of the issues that he has presented today. However, one thing that we certainly agree on is that a lot of public sector workers have seen real-terms reductions in their pay; I draw the House’s attention to my entry in the Register of Members’ Financial Interests as a practising NHS doctor. Does he agree that it is particularly important that the Government implement the recommendations of the national pay review bodies about public sector pay?

Photo of Tan Dhesi Tan Dhesi Shadow Minister (Transport)

I thank the hon. Member for his intervention. We may disagree about certain things, but hard-hitting facts are hard to ignore, especially when the truth hits us. I agree that the work of the independent pay review bodies is very important, but even this week we have seen the Government, including the Prime Minister, not accepting their recommendations. The Government are very selective in when they agree to the recommendations of the independent pay review bodies. That must change. They should either comply with them or completely disregard them; they cannot do both to suit their needs as required.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice)

Can I just confirm that the position of the Labour Front Bench is that Labour would implement the recommendations of the public sector pay review bodies?

Photo of Tan Dhesi Tan Dhesi Shadow Minister (Transport)

I thank the hon. Gentleman for his intervention. Today I am not on the Labour Front Bench, but I am sure that the shadow Minister, my hon. Friend Ms Buck, will highlight exactly what the Labour policy is in that regard. As far as I am concerned, I think it is very important that if we have independent pay review bodies, either they and their work are respected or we do not have them. I am sure that that will be teased out in due course.

The Office for Budget Responsibility forecast in March this year that real household disposable income per person—a measure of living standards—will fall by a cumulative 5.7% between 2022 and 2024. That would be the largest two-year fall since records began back in the 1950s.

One of my Slough constituents wrote to tell me that despite their family of five having a full-time worker and the support of universal credit, they still could not afford their children’s school lunches—an issue that my hon. Friend Mrs Hodgson alluded to earlier. Imagine being a parent who has to send their children off to school knowing that they are hungry. They know that they have done everything they can to provide for them; they have worked hard, sought support and tried their hardest, but there is nothing more they can do and their children will be going hungry. It is a desperate situation for so many, and one we should not be seeing in the world’s sixth largest economy.

Child poverty in the UK is overwhelmingly related to in-work poverty. Some 67% of children living in relative poverty in our country come from working households. Households in which at least one adult is in work have seen a steep rise in poverty under the Tories. Absolute poverty has not fallen since Labour was in power. It has stagnated while the Conservatives have been in power, but, most concerningly, it has started to rise. Absolute child poverty is set to increase even more by the end of this year, meaning that another 400,000 children could be going hungry and cold day to day, or even homeless. Are the Government not ashamed?

Photo of Sharon Hodgson Sharon Hodgson Chair, Finance Committee (Commons), Chair, Finance Committee (Commons)

I just want to add some further statistics to the ones that my hon. Friend is very helpfully providing us with on hungry children. On the economics of universal free school meals, PricewaterhouseCoopers did some work on the numbers and found that for every £1 invested in universal free school meals, the return on investment to the economy in savings on health, child poverty, malnutrition and all the rest is £1.71—so every £1 returns £1.71. Does my hon. Friend not think that that proves the policy would pay for itself?

Photo of Tan Dhesi Tan Dhesi Shadow Minister (Transport)

I defer to my hon. Friend’s expertise. I am sure that the Minister is listening and will be looking at why that is so important.

We need a Government who will focus on breaking the cycle of poverty, who will ensure that respect and dignity are once more at the heart of our social security system, who will make it easier to own a home and raise a family, and who will put an end to the soaring use of food banks. We need an economy and a system that work for everyone, not just a select few, and that do not embed poverty through low-paid insecure work, leave children without meals or homes, or see the hard-working go hungry.

Several hon. Members:


Photo of George Howarth George Howarth Labour, Knowsley

Order. I will impose a four-minute limit on Back-Bench speakers. In view of the number of people who are standing, I may have to lower it again.

Photo of Ian Lavery Ian Lavery Labour, Wansbeck 4:48, 28 June 2023

As ever, it is a pleasure to serve under your chairmanship, Sir George. I thank my hon. Friend Mr Dhesi for bringing this important debate to the Chamber.

I will start with a couple of statements made in the past week or so that I think are absolutely outrageous. The first was:

“I want people to be reassured that we’ve got to hold our nerve, stick to the plan and we will get through this.”

That was from the Prime Minister. People who are in work, in poverty, will be wondering what on earth the Prime Minister—one of the richest people in the country—knows about in-work poverty. I have no doubt that the Prime Minister works very hard indeed, but he gets the rewards. As my hon. Friend the Member for Slough said earlier in his fantastic contribution, the likes of the Prime Minister will not have seen their kids go to school with an empty belly, holes in their shoes or clothes that have been passed down from older siblings or somewhere else. Indeed, will he have used a food bank, for heaven’s sake? I have to ask that question.

The second statement I want to raise was from the Governor of the Bank of England, who said that

“we cannot continue to have the current level of wage increases…the current levels, I’ll be absolutely honest, are unsustainable.”

This is a man who is on more than half a million pounds. The same applies to him: he will not have had any difficulties when he has been making these decisions and telling people who are in poverty and cannot feed their own kids that they have to accept that they cannot have decent pay increases. The fact that inflation is as high as it is has nothing to do with wages for ordinary people. Ordinary people have not had wage increases. There has been wage stagnation. The facts show quite clearly that there has not been much of an increase since 2005—and look at the situation in the country.

I have been on the picket lines with many people over the past few years. Most of them are fighting for decent wages, terms and conditions. Most of them are now having to use food banks. I ask the Minister: why on earth, in this day and age, in the sixth richest economy in the world, should teachers, nurses, doctors, ancillary workers and public sector workers have to rely on food banks? This is the UK. We are not a third world country. Can the Minister please tell us why it is right and why it is acceptable that people in the health service can do a hard day’s graft and have to visit the food bank to feed their kids? Why are teachers having to do the same? Why are public sector workers, including one in five of those working in the DWP, claiming universal credit? It is an absolute outrage. The fact that people are saying that the route out of poverty is work is an absolute nonsense.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 4:52, 28 June 2023

I thank Mr Dhesi for raising this important issue that affects all our constituencies. In the short time I have, I want to give a Northern Ireland perspective and give an example of what it means to be in in-work poverty by showing how it has affected just one of my constituents. Hon. Members who have spoken have raised vital points about in-work poverty, and those who speak after me will do the same.

I want to briefly highlight the effect of in-work poverty on children. There are approximately 450,000 children in Northern Ireland, and more than 100,000 of them are defined as living in poverty. The interesting figure is that the majority of those children—61%—live in households in which at least one parent is working. The hon. Member for Slough referred, as I will, to the situation where there is only one person in the household who is working.

I have the utmost respect for the Minister. He really wants to help; I say that honestly, and I know that in his reply he will try to address the issues we put forward. I have always found him to be amenable and he tries to give us the answers, so I look forward to that.

Almost one in four children in Northern Ireland live in a family who struggle to provide for their basic needs—a warm adequate home, nutritious food and appropriate clothing—and pay for childcare costs. Parents often have to go into debt to make ends meet and do not have the means to save money for unexpected costs or family outings when the family have just one person working. Children in poverty are twice as likely to leave school without five good GCSEs; they are also more likely to suffer poor mental health and fewer years of good physical health. The impact of poor mental and physical health is important.

It breaks my heart that there are parents working away at low-paid jobs, and yet they are physically unable to do better for their children. The sweat of their brow is not enough to bring a wage into the house that will help them adequately look after their children. For many people, the belief that they would be better off not working is a myth that we must fight hard and combat. I know that the Government want to fight and combat that, so I look forward to what the Minister has to say.

I want to give one example that I believe really illustrates what I am saying, which is that no one should be better off not working. I was helping a mother who is on universal credit with her uniform grant forms. She works part time, and she has three children by herself. Her partner pays her £5 a week. She received a wage increase, and her universal credit went down accordingly. When she mentioned it in work, her supervisor told her, “Well, drop your work by a couple of hours,” as she was no better off, but she stated that her mum raised her to work, and the less she took from the state, the better. That is a difficult view to hold as the cost of living skyrockets and those who are working and still poor do not see the benefit of their employers upping their wages. The hon. Member for Slough referred to people on universal credit who want to do the best they can, but who the system does not help. I have given an example, and so has Ian Lavery.

I believe we must have a system in which it pays to work, not to cut hours, and in which children are looked after in the scenario I described. I know that that is a system that the Government want in place. The first step is to ensure that those in work are not poor. People are struggling to pay their mortgage and put diesel in the car; they are cutting down on groceries and stopping their children going to the cinema with their friends whose parents are not working. More can and must be done, and we must take steps so that there can be no doubt that it pays to work. Many people in low-paid jobs are the people I see in my constituency office and the people who I and other MPs have a duty to help.

I thank the hon. Member for Slough and look forward to the contributions of other Members. I look to the Minister to respond with the answers that we wish to hear.

Photo of Ruth Jones Ruth Jones Shadow Minister (Environment, Food and Rural Affairs) 4:56, 28 June 2023

It is a pleasure to serve under your chairmanship, Sir George. I am grateful to my hon. Friend Mr Dhesi for bringing this debate before the House. While I am on my feet, let me say that I am proud of the wonderful diversity in Newport West, and I wish all Muslims in my constituency and across the country Eid Mubarak today.

We are here to discuss such an important issue. I will speak briefly on behalf of the people of Newport West. Yesterday, I spoke in the House about the 9,500 people in Newport West who will now be forced to pay £2,400 more a year, thanks to the Tory mortgage bombshell and an inflation crisis made in Downing Street. It is clear from my surgeries and from all the emails and letters I receive from local people that after 13 years of Tory Government, people in Newport West are working harder and doing more but earning less in real terms. In-work poverty is a crisis that Ministers seem so unwilling to tackle.

One of my constituents recently contacted me to share her story. She has two school-age children, she works two jobs in two separate superstores and she is picking up overtime whenever it is available. She is really proud that she works, but she is not proud that she is struggling to pay for bus fares and to feed her children. This is the lived experience of our people, these are the challenges that remain unaddressed by Tory Ministers, and these are the difficulties that were made in Downing Street.

I am increasingly hearing from local people, because they come to me after all other routes have been closed, as the systems that should support them have been cut to the bone by this Conservative Government. When the Minister winds up, I want him to tell me what I should say to my constituents and all those who have come to me with their stories of how their monthly pay packets simply do not cover the cost of living and survival. I am sure the Minister will be able to give us a number of stats to claim that things are all fine and hunky-dory—I was in Prime Minister’s Question Time today, too—but I know that my constituents are worse off. They are working all the hours they can get, but it is still not enough.

In-work poverty is very real. As has already been said, we are one of the richest countries in this world. It is a disgrace that people are forced to struggle like this. If Tory Ministers do not want to sort this out, they should get out of the way for a Government who will.

Photo of Rachel Hopkins Rachel Hopkins Shadow Minister (Defence) 4:58, 28 June 2023

It is a pleasure to serve under your chairmanship, Sir George. I thank my hon. Friend Mr Dhesi for bringing forward this really important debate on in-work poverty.

Having a job should bring people security, so that they can raise their family, yet we are seeing so many more cases where being in work is leading to in-work poverty. Research from the Joseph Rowntree Foundation found that 61% of working-age adults in poverty live in a household where at least one adult is in work, and 11% of all workers live in a household in poverty. The poverty rate for part-time workers is double that for full-time workers—18% compared with 9%—and self-employed workers are twice as likely to be in poverty as employees, at 21% compared with 10%.

In-work poverty does not affect all groups equally. Ethnic minorities have substantially higher in-work poverty and higher child poverty rates. Many ethnic minority groups are more likely to have the types of jobs and working patterns that are associated with in-work poverty. This Conservative Government’s cost of living crisis has seen real-terms pay fall at the fastest rate since 2001, when records began. As we see mortgage rates increase and rents rise, millions face an increased risk of falling into in-work poverty.

I want to focus on housing. Around 2 million households in the private rented sector—around 38% of the total of those in the private rented sector—receive housing cost support through universal credit or housing benefit, yet the Government chose to freeze local housing allowance rates between 2016 and 2020. Although there was a change in 2020, in the pandemic, it has been frozen since that time. Institute for Fiscal Studies analysis shows that in Luton there is now a £100 deficit in the local housing allowance rate, compared with the lowest rents in the area. Office for National Statistics figures show that the median rent paid by tenants in Luton increased by 8% between March 2020 and March this year.

There is also a significant increase in the number of people in a negative budget; they are unable to meet their living costs, despite being in work. The causes of negative budgets are complex, but there are fundamentally two reasons: a low income from being in low-paid work, and having high household costs. Citizens Advice Luton is seeing increasing numbers of people in negative budget, increased personal debt and increased poverty.

I want to press the Minister. What do I say to those families who are working hard, yet struggling to meet their basic living costs? I am deeply concerned that the lack of action on the local housing allowance will mean that more and more of my Luton South constituents will face eviction, as they simply cannot afford their rent.

Photo of Matt Rodda Matt Rodda Shadow Minister (Work and Pensions) (Pensions) 5:02, 28 June 2023

It is a pleasure to serve under your chairmanship, Sir George. I thank my hon. Friend Mr Dhesi, my Berkshire colleague, for his excellent work on this important issue. He is a doughty champion for people across our county, and is focused on his constituency. In the time allowed, I would also briefly like to thank families who are under enormous pressure at this time. They are working incredibly hard to keep up with a huge range of increases in costs, whether that is in the price of food, which has rocketed, energy costs, mortgages or rents.

I briefly want to mention some points, to which I hope the Minister will respond. I hope he will be able to direct his remarks to me, my hon. Friend Rachel Hopkins and my hon. Friend the Member for Slough, because we have many residents in high-cost areas who are under pressure because of the high cost of renting and buying homes in the south-east of England and other high-cost areas.

It is staggering that food prices have risen by around 20% in the past few months. Imagine the impact on most families. The cost of common staple goods, such as Weetabix, pasta, eggs and cheese, which every family rely on daily, and which are almost impossible to substitute in a weekly shop, have all gone up enormously. That is affecting people across the whole country in a most dreadful way. Families are struggling because of that, and there is no easy way to avoid it. Children are desperate for their favourite foods—they are often keen to have specific things. The cost of even own-brand items has gone up enormously.

Equally, the cost of housing has skyrocketed. I have mentioned constituents; there are those whom my hon. Friend Ruth Jones mentioned in a debate yesterday, who face terrible pressures in the mortgage market. I mentioned a couple of constituents who are under enormous pressure, which is common in my area. There are huge additional costs on mortgages. I spoke about a family paying £800 extra a month for a mortgage on a three-bedroom property in a suburb. Another resident, who lives in Reading town centre, is having to pay an extra £400 a month on the mortgage on her flat. She is already suffering from the cladding crisis, because of unresolved cladding problems with the property. Imagine the pressure that a person in that situation is under at this terrible time.

I hope that the Minister will broaden his response and address some of the related issues around housing and the effect on renters. Landlords are under enormous pressure to put up rents because of the increase in mortgages. That is a hugely important related issue. My hon. Friend Stephanie Peacock made an excellent point about the number of families living on very modest incomes. Rents are increasing dramatically. In the area that I represent, there has been an increase in the proportion of people who rent and a decrease in the number of people who can afford to buy because of the high cost of housing. That puts pressure on many young families, many living in terraced housing or flats in our town centre.

In addition—I hope that the Minister will respond to this—energy prices are still extremely high. We still have not seen a proper windfall tax. There is still enormous pressure on households because of that problem, which will only get worse in winter, in the colder months. It might not seem immediate to some people, but it will be a huge challenge for many residents facing enormous costs. Many people in this country still live in poorly insulated properties. In the area that I represent, we have a very large number of terraced houses, as do many British cities and towns of a similar size, such as Derby and Portsmouth; so do London boroughs, and other areas in the north of England. Much of that housing stock is poorly insulated. That is a hugely important related problem, and I hope that the Minister can update us on the Government’s action. So far, they have been woeful on that point. A series of problems has not been addressed by either the coalition Government or Conservative Governments.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice) 5:06, 28 June 2023

It is a great pleasure to see you in the Chair, Sir George. I, too, congratulate Mr Dhesi on securing the debate. It is one of those hour-long debates where I come along and wonder how many people will be in attendance. It would be fair to say that it has been a well-subscribed debate, hence the need for a time limit. I am only sorry that the only two Conservatives present are here because they are mandated to be. I would have thought that in-work poverty might have meant a little more than that.

We can look at a number of issues when we consider in-work poverty. People will say that it is incredibly complex. In reality, it happens because people do not have enough money. That is the brutal reality. We do not have a real living wage in this country; we have a con trick. The Government talk about their national living wage, but it is not a real living wage. It also appears, bizarrely—I pressed the hon. Member for Slough on this point—that the two main parties are not of the view that the national pay review body’s recommendations should be implemented. That is deeply worrying; for many of those same staff we clapped during the pandemic, that talk will seem like hollow words if we do not back those recommendations.

The fact is that staff are struggling. I highlight the plight of members of the Public and Commercial Services Union. My hon. Friend Chris Stephens does a huge amount with them. The reality is that there are Department for Work and Pensions staff who administer the benefits system in the UK who are being fed by a food bank because of poverty pay in their Department. If that does not shame DWP Ministers, I do not know what will.

The Government could do a number of things to tackle in-work poverty. First, they could look at the woeful rates of statutory sick pay. People have to earn a minimum of £123 a week before statutory sick pay kicks in. The Government should also look at fixing some of the known problems with universal credit, which of course is an in-work benefit. We often hear from the Government about the importance of people working their way out of poverty, but the people I represent, many of whom go out and do a decent day’s work, are in a ridiculous situation. When they go to the supermarket, baby formula is behind the tills because people are stealing it, and butter is security-tagged. That is because people are put in a position where, frankly, they do not have enough money. That comes back to the same problem of in-work poverty.

The Government can talk all they like about the importance of working to get out of poverty, but as we have heard during today’s debate, the biggest problem for people who are in poverty is that they are not being paid enough. I will finish by saying that one of the best ways to tackle in-work poverty is to join a trade union, and to use its leverage in the workplace to get a fair day’s pay for a fair day’s work.

Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions) 5:09, 28 June 2023

It is a pleasure to be here under your chairmanship, Sir George. I congratulate my hon. Friend Mr Dhesi on introducing the debate, and on setting out a powerful and well-argued case for action on the scourge of in-work poverty. We also heard excellent contributions from my hon. Friends the Members for Wansbeck (Ian Lavery), for Newport West (Ruth Jones), for Luton South (Rachel Hopkins), and for Reading East (Matt Rodda).

A consistent theme of the debate has been the extent to which the problem of in-work poverty, which has increased over a number of years, has been exacerbated by the cost of living crisis that we have been grappling with over the past year. That is driven by such factors as core food inflation, which is worse in this country than in neighbouring countries; the housing cost crisis, which has been driven by rising mortgages and rents; and a decade of low wage growth.

The Trussell Trust’s figures today, which should shame the Government—should shame any Government—show that the scourge of food insecurity is affecting millions of people. As was said by many hon. Friends, it has been proven that work is not in itself a means of ensuring that people are not food insecure. My food bank, and food banks in the constituencies of my hon. Friends, are reporting unprecedented demand for assistance from people who are working.

Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth

Does my hon. Friend want to comment on the fact that work is now not the route out of poverty, as we have heard? Nothing in what the Government propose on in-work progression will make an impact on that.

Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions)

I will touch on that in a second. We all want to see people in good, well-paid work. The fact that work is not a route out of poverty has been proven amply in recent years, and more so than previously, but I would also say that work in itself is not necessarily a route out of poverty for people bringing up children. It has always been, and remains, the case that Government have a role to play in ensuring that working families, including those with children, receive support, and that that is not simply left to wages.

The story of in-work poverty over the last 13 years is one of wasted opportunity. One of the most underappreciated social changes of recent decades is the decline in family worklessness. When Labour came into government in 1997, one in five children were living in a workless household. On the most recent data, 9% of children are in workless households. The decline in family worklessness has been an almost continuous trend, outside of economic downturns, over the last two or more decades. There are not only far fewer children in workless families than there were a generation ago, but more couple families in which both adults are working, and fewer in which only one parent works. All those changes should be positive for poverty reduction.

“Work is the best route out of poverty” was always a glib soundbite that dismissed the challenges faced by people who cannot work, whether because of disability, health or caring responsibilities, but it is true that as a general rule parental employment greatly reduces the risk of poverty. On the face of it, then, the employment situation for families with children is incomparably better than it was a generation ago, yet despite continuing improvement in parental employment, child poverty was higher in 2021-22 than it was in 2010-11.

The link between increased employment and poverty reduction broke down somewhere around the middle of the last decade. Some 19% of children in families with someone in work were in poverty after housing costs. By 2019-20, that figure had risen to 26%. It fell back very slightly in the latest data, which are for 2021-22. I suspect that is to do with the boost provided to universal credit and other support during the pandemic.

Astonishingly, the poverty rate after housing costs for children in single-earner families with full-time work is now 44%. Given the changes to employment over this period, had the risk of poverty for working families remained where it was when Labour left office in 2010, we would now be looking at there being far fewer children in poverty. That is what I mean about a wasted opportunity. Just think: the historical record of Conservative-led Governments would be one of poverty reduction. Ministers would be able to proudly defend their record on child poverty. They would not need to switch poverty measures to confuse people. They would be quite happy to be judged on the headline relative poverty measure.

How did this all happen? Faced with employment trends that would have reduced poverty, we had policies that made working and out-of-work families poorer—specifically the benefit freeze, which permanently reduced the value of in-work and out-of-work support. Universal credit was designed around a single-earner household model, and it continues to provide poor rewards for second earners when they increase their hours and earnings. The Government’s response to the weak incentives in universal credit is the crude stick of in-work conditionality. It is virtually an admission that they do not expect second earners to be dramatically better off if they increase their earnings.

For too long, jobcentre policy has been concerned with getting people into any job without considering crucial aspects of job quality such as stability and predictability of earnings and progression. If we want work to be the main route to poverty reduction—and we do—for those who can work, it needs to be work where people can genuinely improve their incomes over time, rather than struggle with zero-hours contracts, unpredictable shift patterns and fluctuating earnings.

The lesson is that increasing parental employment is a necessary but not sufficient condition for reducing child poverty. If we want to reduce poverty, we need a genuinely supportive welfare state and a focus on job quality. These have been the missing ingredients in Government policy since 2010, leading to the squandering of opportunities for poverty reduction.

Photo of Guy Opperman Guy Opperman The Minister of State, Department for Work and Pensions 5:16, 28 June 2023

It is a pleasure to serve under your chairmanship, Sir George, and I congratulate Mr Dhesi on securing this debate. He and others have raised a number of policy issues that are not in my portfolio, but I will try to deal with them briefly if I can.

In respect of housing, I am not the Housing Minister, but the hon. Member will be aware that in 2022-23, the Government are projected to spend £30 billion to support renters. That is 1.4% of GDP. He may criticise that as an insufficient sum, but it is the highest of any country in the OECD in relation to spending on housing rental support—the next highest is 0.9% of GDP. Clearly, the figure is higher than when we came into office.

The hon. Member’s second point about housing related to the production of homes. We have built 2.2 million additional homes since coming into office. Housing starts are double the number we inherited from the Labour Government in 2010. More homes are meeting decent homes standards, and housing supply is up 10% in the last year for which we have figures. The most recent figures show a 20-year high in the number of new buyers.

On education, the hon. Member specifically raised free school meals. I am not aware that that is Labour Front-Bench policy, but he has the joy of the Back-Bench freedom to roam and create new policy. In any event, it is not even SNP policy. The SNP briefly adopted that, but obviously then parked it in a motorhome, and it has been driven off into the distance of some strange new world of new policy.

Photo of Guy Opperman Guy Opperman The Minister of State, Department for Work and Pensions

Of course I will. I look forward to the hon. Gentleman’s defence of all matters motorhomes and policy.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice)

I am certainly not going to stray into the Contempt of Court Act 1981, as I am sure the Minister would not either as a former solicitor. Given that he seems to know so much about the free school meals position in Scotland, will he outline to hon. Members when free school meals kick in? I am sure he knows.

Photo of Guy Opperman Guy Opperman The Minister of State, Department for Work and Pensions

As I indicated, I am not the Education Minister, but what I am going to do is set out the position. I will happily make the point that this is not Labour party policy. It used to be the case, as I understand it. that the SNP proposed universal free school meals, but recently it said that it would need to target that—in other words, it would need to make that means-tested.

Photo of Guy Opperman Guy Opperman The Minister of State, Department for Work and Pensions

No, I am trying to answer this particular point. The reality of the situation on free school meals—[Interruption.] Hon. Members may chunter away as much as they like, but I am going to try to set this out. On free school meals, under the benefits-based criteria, which I believe is what the SNP Government wish to use, 2 million of the most disadvantaged pupils are eligible for and claim a free school meal. That is 23.8% of all pupils in state-funded schools. The number eligible for free school meals has increased since 2016-17 from 1.128 million to 2.019 million. Almost 1.3 million additional infants enjoy a free healthy and nutritious meal at lunchtime, following the introduction by this Government —to be fair, in the coalition—of the universal infant free school meal policy in 2014. This Government have extended eligibility more than any other. Taken together, we spend more than £1 billion per annum delivering free lunches to the greatest ever proportion of schoolchildren —to more than one third of schoolchildren.

I will move away from those particular policies, because Ian Lavery raised a couple of points that I want to address. He was very critical of the Prime Minister, and it is perfectly his right to be so. The Prime Minister is a gentleman of wealth now, but the hon. Gentleman should remember that he is the son of a pharmacist and a GP, who grew up in Southampton.

The hon. Member also talked about his constituency. He will be aware that I set up the Northumberland Community Bank in Ashington in his constituency. The bank is the fastest growing credit union in the north and is, without a shadow of a doubt, doing amazing work in providing support for loans to local people in Northumberland. I say respectfully that that is an amazing institution, which I hope he supports.

Photo of Ian Lavery Ian Lavery Labour, Wansbeck

Will the Minister kindly inform the House what those last remarks have to do with this debate?

Photo of Guy Opperman Guy Opperman The Minister of State, Department for Work and Pensions

The hon. Gentleman raised issues about support for working people. The Northumberland Community Bank is a fantastic institution that provides savings and loans to those in difficulties. It is a co-operative, which I am sure he supports; it was set up in Northumberland; it is a success story; and it is based in his constituency. I will move on.

The Government’s support is underpinned by the wider welfare system, and I will try to set out some particular points on that. In 2023-24, we will spend around £276 billion through the welfare system in Great Britain, including £124 billion on people of working age and their children. Benefit rates and state pensions have increased by 10.1% for 2023-24 and the benefit cap has increased by the same amount. The reality of the situation is that this country has never spent as much as it presently does on this support.

Photo of Guy Opperman Guy Opperman The Minister of State, Department for Work and Pensions

I am going to make some progress. [Interruption.]

Photo of George Howarth George Howarth Labour, Knowsley

Order. I do not want to be unkind to the hon. Lady, but in the previous debate, I did point out to an hon. Member that to arrive at the end of the debate and intervene is not necessarily the right way to go about things. If she insists, she can, but I just say that. I call the Minister.

Photo of Guy Opperman Guy Opperman The Minister of State, Department for Work and Pensions

Our commitment to protecting the most vulnerable is reflected in the action that we have taken over the past two years as people continue to face cost of living pressures, which are clearly evident and are fundamentally derived from the impact of the covid pandemic and the subsequent war in Ukraine, and the impact of that on energy and other costs.

Overall, in 2023 and 2024, we are providing total support worth more than £94 billion to help people with rising bills. That is an average of more than £3,300 per household. Last year, we made cost of living payments of up to £650 to over 8 million low-income households. This year, eligible households will continue to receive additional payments of up to £900. The first £301 payment to 8.3 million households—this support is worth more than £2.5 billion in total—has recently been paid. Further payments will be made this year. In addition, over 6 million people across the UK on eligible extra cost disability benefits have been paid a further £150 disability cost of living payment.

The practical reality is that we have made progress. In 2021-22, 1.7 million fewer people were in absolute poverty after housing costs than in 2009-10, including 400,000 fewer children. Furthermore, there are now nearly 1 million fewer workless households than in 2010. That is why, with more than 1 million vacancies across the UK, our focus is firmly on supporting people in work, and our core jobcentre offer provides a range of options, including face-to-face work coach support and help to boost interview and employment skills.

The taper has been changed, which I believe is very much of assistance. We have taken decisive action on making work pay by cutting the universal credit taper from 63% to 55% and by increasing the universal credit work allowance by £500 a year, allowing households to keep more of what they earn. The national living wage has increased by a record level of 9.7% to £10.42 per hour from this April, which represents a rise of more than £1,600 in the gross annual earnings of a full-time worker.

To help people to progress, we are extending the support offered by our jobcentres to low-paid workers, so that they can increase their hours and move into better-quality jobs. There are two key measures: the in-work progression offer and the increase in the administrative earnings thresholds in universal credit. The in-work progression offer is now live across all jobcentres in Great Britain. We estimate that about 1.4 million low-paid claimants are eligible for work coach support.

I am conscious of time, and I want to address a key issue. Legitimate points were made on the cost of living and earnings, but I am pleased that, today, the Department for Work and Pensions raised the amount that working parents on universal credit may claim for childcare. This is up to £951 a month for one child and £1,630 for two or more children. That is an increase of approximately 47% on the previous limits, which were £646 and £1,108 respectively. That is a massive increase in childcare support for working parents and of massive assistance to those who work. I hope that the House will welcome that.

The Government are also helping eligible parents to cover the costs for the first month of childcare when they enter work and as they increase their working hours. In addition, the House will be aware of the expansion of the 30 hours of funded childcare that the Government originally introduced in 2017, extending the entitlement to eligible working parents for children aged from nine months old to when they start primary school. That will remove one of the largest hurdles that working parents face by giving a huge boost to the amount of funded childcare that they can access, saving them about £6,500 a year.

Taken collectively, we have heard loud and clear that there is a need for a better amount of support for this particular childcare. In respect of this point, we will provide £204 million of extra funding for local authorities to increase the hourly rates that they pay providers, and make sure that rates continue to go up each year.

The Government are committed to tackling poverty, both in and out of work. We are focusing on making work pay and on progression opportunities. We will ensure that everyone has the opportunity to move into a job where they can realise their potential.

Photo of Tan Dhesi Tan Dhesi Shadow Minister (Transport) 5:27, 28 June 2023

Thank you, Sir George, for chairing today’s important debate on in-work poverty. I thank the Minister, the Labour shadow Minister, my hon. Friend Ms Buck, and the SNP spokesman, David Linden, for their responses, as well as other hon. Members who made such sobering, excellent contributions in speeches and interventions.

My gratitude also goes to the House of Commons Library for providing accurate and relevant statistics. I thank Crisis, the Trussell Trust, the Joseph Rowntree Foundation and Slough food bank for providing their analyses, as well as for the brilliant work that they do in my Slough constituency and across our country.

Ministers may want something to blame, whether that is covid, the war in Ukraine or the energy crisis, but the truth is that in-work poverty has been caused by low and insecure earnings, a high cost of living and little affordable housing. As my hon. Friends have eloquently explained, the problems are worse for marginalised communities, especially for many in ethnic minority communities.

All three of the problems that I have highlighted are consequences of Government incompetence and ideology. All three have led to stagnation and suffering. According to Crisis, one in four households who became homeless in 2022 had at least one person in work. The crisis of in-work poverty is leading to a crisis of in-work homelessness, caused by a toxic mix of low-paid, insecure work and a lack of affordable housing. That is why we have a situation in our country where many people are going into work without having a home to return to. We must be in a position whereby people in our country—or in any country—should be able to aspire to a decent wage, to own their own home and to raise and support a family. The Government must ensure that people can aspire to do more than merely survive—

Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).