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Stop pushing people into poverty and get serious about job creation

Lisa Nandy MP 17/1/13

The Welfare Up-Rating Bill, which had its second reading last week, is a miserable piece of legislation which imposes a 1% cap on tax credits and benefits over the next three years, casually increasing poverty amongst the working poor and the unemployed while seeking to demonise millions of people who have fallen victim to the Government’s failed economic policies.

Over the last year I have been approached for help by many of the people Ministers sought to portray as ‘shirkers’, including young graduates who were the first in their family to go to university and are now losing out to school leavers because they are more expensive to employ, 50 year olds with families who fear they will never work again and former Remploy workers who fought the Government tooth and nail last year to hang on to their jobs and their dignity, to no avail.

The other group that will lose the most because of this Bill are children.

Forty percent of children across Greater Manchester already go to school hungry

As a result, food banks have become part of the landscape even before these latest real-terms cut to benefits and tax credits have taken hold. There was not one single reference to those children in the Autumn Statement and, understandably, Iain Duncan Smith did not choose to discuss them in the debate last week, instead justifying the Bill using a series of false arguments.

Firstly, the Government has sought to portray real-terms cuts to benefits as fair to people in work, forcing the so called ‘scroungers’ (by which they mean the unemployed) to pay more.

That claim was completely demolished by the Resolution Foundation which pointed out that two-thirds of people affected by this Bill are currently in work

Further, the claim that the growing army of unemployed people are ‘scroungers’ is not just deeply offensive but also wrong. The Joseph Rowntree Foundation found no evidence for a culture of worklessness in its recent research and high levels of commitment to work amongst the long-term unemployed.

Secondly, the same piece of research also reveals that contrary to the Government’s claims, there are not two distinct groups, the working poor and the non-working poor, who can somehow be separated out and divided. The truth is that insecure temporary work, zero-hours contracts and agency work is a daily reality for millions of people, who move in and out of employment at an alarming rate.

That one day they can be ‘strivers’ and another day ‘scroungers’ highlights just how ridiculous the Government’s rhetoric is

The third myth, repeated frequently in the debate last week, was that the welfare bill is too high because individual claimants are receiving too much money. In the words of one Liberal Democrat MP, ‘benefits are far too high’ and ‘unsustainable’. A Conservative MP also described the benefits system as ‘a life of luxury’ and ‘a ridiculous money merry-go-round’. The amount of benefit cited by many MPs included housing benefit, but omitted to mention that the recipients of housing benefit are not benefit claimants but private sector landlords. In fact, over the course of my lifetime the value of benefits has fallen sharply. The Child Poverty Action Group points out that in 1979 unemployment benefit was 22% of average earnings; today, it is just 15%.

As David Miliband said in last week’s debate, the enemy within is unemployment, not the unemployed. Instead of making the poor even poorer still, the best way to reduce the welfare bill is to give people the chance to work. The Government’s disastrous austerity package is proving this case: as unemployment tragically continues to rise in Wigan and across the country, the Office for Budget Responsibility forecasts the benefits bill will rise by £6 billion.

Instead of pushing people into grinding poverty, the Government must get serious about job creation, through schemes like the Future Jobs Fund and by using its considerable public procurement power to ensure that we get young people into apprenticeships and provide others with paid work and decent career advancement.

Ministers must also take seriously the impact of low pay on local economies.

The more people who are forced to rely on inadequate levels of tax credits because their employers pay poverty wages, the fewer people there are spending in local economies.

In places like Wigan, where small businesses collectively are the biggest employer, the combined impact of low-pay is devastating, causing job losses and restricting growth in the local economy.

That the Bill will have appalling consequences for the very poorest in society, whether they are in or out of work, is self evident, but the politics of the debate is genuinely shocking. To seek to use divide and rule politics – pitting the working poor against the unemployed - simply does not wash when Ministers have never once tried to explain how it is fair that people seeking work will get a rise of just 72p a week while, from April, millionaires will get a tax cut worth £2058 a week.

Every MP who voted for the Bill has an income of at least £65,000.  That most of them voted for this Bill was shameful; that a minority sought to demonise people who need support was shocking; but for some Conservative MPs to laugh and joke as the debate unfolded was the biggest insult of all.



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