During this week’s House of Commons debate about the Welfare Benefits Uprating Bill – which would keep benefit rises to 1% for three years from next April – I spoke about the Government’s policies which are underpinned by their ideology and they’re determined to demonise people receiving benefits, create resentment in those not receiving benefits, and to create an ‘us and them’ culture.
Seven million working households will lose an average of £165 a year as a result of this bill. But I believe the British public are starting to see through this Government and the myths they are peddling.
The first myth is that most people on benefits are out of work. In fact over two thirds of benefit recipients are people in-work. Myth number two is that welfare benefits have gone up by more than average earnings. In fact since 2002, average earnings rose by 36% with Job Seekers Allowance increasing by 32%.
Myth number three is that the government says the 1% cap is about making savings and bringing the deficit down but, at the same time, they give tax breaks to the wealthiest in society; £3bn to over 300,000 people earning over £150,000 a year. This shows the government’s true priorities.
Instead of impoverishing children and robbing them of their futures we need to get the economy moving again. The Chancellor should swallow his pride and bring forward infra-structure projects and a house building programme; put a £2bn tax on bank bonuses; cut VAT increases for home improvements and give a National Insurance holiday for small businesses.
Without this we are in danger of losing a generation, storing up health and social problems for the future and seeing a divided, not the One Nation, Britain that we want.
The full text of my speech speech is below. You can also read it online here.
The Children’s Society has found that:
- Up to 40,000 soldiers, 300,000 nurses and 150,000 primary and nursery school teachers will lose as a result of the 1% uprating. Over a million administrative workers and secretaries will also lose.
- A nurse earning £530 per week who is a lone parent with two children will lose £424 a year by 2015.
- A second lieutenant in the Army who is the only earner in the family with 3 children will lose £552 by 2015.
- A couple with two children, with the single earner being a primary school teacher earning £600 per week will lose £424 a year by 2015.
- A couple with two children and two earners, one a childminder earning £240 a week and the other a postal worker earning £395 per week will lose £351 a year by 2015.
Speech in full
Mr Speaker I rise to speak on behalf of the many constituents coming into my office every week who have been affected by this Government’s so-called welfare reforms. I have said this before – and I am going to keep on saying it – at every point we need to challenge the ideology underpinning these reforms – including this Bill – and the ‘divide and rule’ narrative that this Coalition Government has developed.
I know that I was not alone in being deeply offended by the Chancellor’s autumn statement not just because, as the IFS analysis showed, the poorest 10%’s income would drop the most, but because of the way he attempted to justify his actions by deliberately vilifying people receiving benefits as the new undeserving poor. Using pejorative phrases such as scroungers, work-shy, or shirker he sunk to a new low, with a disgraceful misrepresentation of the facts. So, as my colleagues are also doing, I am going to attempt to put the facts straight, as well as describe the effects of this Bill (on top of all the other welfare cuts) and alternatives that could be considered.
Myth number 1 is that most people on benefits are out of work. In fact over two thirds of benefit recipients are people in-work. According to JRF/NPI, 6.1m people in poverty are now living in working households, compared to 5m in out of work households.
The 1% cap in benefit up-rating will mean the income of over 500,000 key workers – nurses & midwives, primary & nursery school teachers, admin workers & secretaries, shop workers, electricians & fitters, armed forces personnel – will be affected, pushing more people in-work into poverty. The Children’s Society have provided some illustrative examples which were reported in the press over the week end which works out what loss of income these workers, currently receiving benefit, will be affected: these scenarios suggest that by 2015 the loss of income could range from £296 pa for a lone parent hairdresser to £552 pa for an army lieutenant in a family with 3 children.
With food inflation up by 26% since 2009 and energy bills up by almost the same extent (nearly 20%) a 1% up-rating of benefits means in addition to this loss of benefits income, they will be able to afford even less in the future: heating or eating will for many become a real choice. It is clear that this will push even more people into poverty including children. We’ve already had IFS estimates that 400,000 more children will be living in poverty by the end of this Parliament but that hadn’t included only a 1% increase in benefits. On this basis how is the Government able to justify their commitment to reducing child poverty or fulfil their obligations under the 2010 Child Poverty Act?
Myth number 2 is that welfare benefits have gone up by more than average earnings. In fact since 2002, average earnings rose by 36% with JSA for example increasing by 32%. And between 2007/8 and 2010/11 to ensure that work does pay, benefits for people in work rose by 53.1% compared with 46.9% for out of work benefits. The Government have also claimed that the 1% cap will be offset by increases in tax thresholds; well we know that least 682,000 working families receiving child tax credit earn less than £6,420 so I’m afraid won’t benefit from the increase in tax threshold.
Myth number 3 is that the 1% cap is about making savings and bringing the deficit down. Yes we do need to reduce our spending and borrowing, but at a scale and pace that will not strangle growth and job creation. What needs addressing is the failure of this Govt’s economic policies: growth downgraded – again, borrowing up in 2012 by £8.3bn from 2011 and set to need £150bn more by end of Parliament, and the deficit £1bn more in Nov 2012 compared with 2011 meaning that the Government will fail to balance the budget as they promised by 2015. The growth we saw at the end of 2010 has been flittered away by this Govt and since 2011 we are now the worst performing economy in the G8.
And the Govt’s response to their failing economic policies? To give tax breaks to the wealthiest in society – £3bn to over 300,000 earning over £150,000 pa with an average gain of £10,000 – and make people on low incomes pay. According to the OBR £505m will be saved in 2013-14 and £2175 m 2014-15 0.19% of public spending. This is about choices Mr Speaker and it is quite clear where this Government’s priorities lie.
The Chancellor said in the autumn statement that we needed a ‘welfare system we could afford’. Well tax credits and benefits form part of the ‘automatic stabilisers’ which help dampen an economy in booms and boost it in recession; and this is what we’ve seen. The recession in the 1990s which was much less severe than what we have had over the last few years, e.g., in terms job casualties, has been in part due to our tax credits system. The Chancellor has previously argued in favour of these automatic stabilisers saying that ‘they are key parts of flexibility built into our [economic] plan’ as has the IMF.
The choices the Govt makes are underpinned by their ideology – to demonise people receiving benefits creating antipathy and resentment in non-benefit recipients; to create an ‘us’ and ‘them’ culture and, by the withdrawal of universal benefits, such as child benefit, an irrelevance of the welfare system to non-welfare recipients, and then to quietly dismantle it. I am proud of our model of social welfare, borne out of the Second World War when we literally were all in it together. I want to retain this model with its principles of inclusion, support and security for all, protecting anyone of us should we fall on hard times, assuring our dignity and the basics of life, and helping us get back on our feet.
Fortunately the British public are starting to see through this Govt. As British Social Attitudes Surveys consistently show they don’t want a divided society but a fairer more equal society. This has been reflected in recent opinion polls on benefits. When the myths of what the Govt are exposed most people don’t support a further downgrading of benefits.
Instead of impoverishing children and robbing them of their futures we need to get the economy moving again – the Chancellor should swallow his pride and support my Rt Hon Friend’s proposals on this: bring forward infra-structure projects and a house building programme, £2bn tax on bank bonuses, cut VAT inc for home improvements, NI holiday for small businesses.
Without this we are in danger of losing a generation, storing up health and social problems for the future and seeing a divided not the One Nation Britain that we want.