I beg to move,
That this House calls on the Government to cancel its planned cut to Universal Credit and Working Tax Credit which from the end of September 2021 will reduce support for many hard-working families by £1,040 a year.
I reiterate what I said when we had this debate in January: while, understandably, strength of feeling is high when talking about something that affects so many families and households across the country, this should not be a debate with personal abuse or accusations of bad motive. I ask everyone following the debate at home to consider that, too. If we instead took a moment to assess the matter properly and considered not just the impact on the 6 million affected families but what is in the best interests of our economy as we recover from the pandemic and, crucially, what we need as a country to be able to face the inevitable shocks and economic problems that will come our way in the future, we would decide that it would be unconscionable to take this money away.
In my constituency, £10.5 million will disappear from the spending capacity in our local economy when more than 10,000 people and working families lose access to this benefit. Does my hon. Friend agree that that will have a tremendously bad effect on local spending power?
My hon. Friend is exactly right. The reduction of £20 a week for 6 million low-income families will be the single biggest overnight cut in the history of the welfare state—bigger even than the cut to unemployment benefit in 1931 that caused the Government of the day to collapse. The scope of the cut, affecting one in 14 British workers, is also unprecedented. For those reasons alone, it is right that we are having this debate and that our constituents know where we stand.
Will the hon. Member tell me how many households in his constituency are in receipt of universal credit? I am giving him a chance to put on the record how many of his constituents are affected. There is a whole section of my speech in which I will tell him how the Government can afford to pay for this.
I did not know that the hon. Member did not know the figure for his constituency—I promise that I was not trying to catch him out. I was simply trying to make the point that the recovery of his local economy would be adversely affected by taking that spending power away, as my hon. Friend the Member for Wallasey (Dame Angela Eagle) made clear for her constituency.
I thank the shadow Secretary of State for introducing this important debate. Northern Ireland has the highest levels of child poverty in United Kingdom of Great Britain and Northern Ireland. My mailbag, like everyone’s, is full of real-life stories of people worried sick about how they will be affected. Does he agree that the removal of the £20 universal credit payment will plunge even more people into food poverty and have a detrimental effect not just on their pockets financially but on their health? It is a double whammy, and they just cannot take it.
I agree with the hon. Member. Opposition to the cut is truly universal, for those reasons. It includes MPs, charities, unions and six former Conservative Secretaries of State for Work and Pensions. If we are being honest, I think several serving Conservative Ministers also share that view. In this debate, I want to knock down the fiction that there is somehow a choice to be made between cancelling the cut and getting people back into work. I want to talk about what the cut will mean for the families affected and the impact that it will have on all our local economies and the national resilience necessary to meet future challenges. I also want to talk about how the Government could easily fund universal credit at its current rate without making this counterproductive and harsh cut.
In the right hon. Member’s constituency, 4,000 households are in receipt of universal credit. I want to ensure that, at the beginning of the debate, we knock down the argument, which we have also heard from the Prime Minister, that a focus on jobs will somehow mean that we do not need to keep universal credit at its current level. Of course we should get people back into jobs, but it is simply false to say that the choice is between keeping the uplift and doing that.
Let me remind the House again that universal credit is an in-work benefit. Almost half of the incomes that Government Members wish to cut are of people in work. Either the Prime Minister, the Cabinet and several Conservative MPs do not know how universal credit works or they are being wilfully misleading. I do not know which is worse. Let us have a real debate rather than this ignorant rhetoric about work or welfare, because—this is the crucial point—if as a country we could get the people affected into better-paying jobs, the cost of keeping universal credit at its current level would go down automatically. That is exactly how the system is designed to work. Anyone saying that the cut needs to happen to get people back into work, or to get them working more hours, does not know what they are talking about.
The hon. Member is kind. I hope he will answer my intervention rather than re-intervene on me; I found that very odd earlier. Is it better in principle that people receive £20 through the benefits system or through going into longer hours, with more progress in work and building up a career where there is no limit on what they achieve?
Of course it is better that people are in work, but the whole point of reform in this area over the last decade and a half has been to try to create a system that integrates with the world of work. I cannot see how the hon. Member does not understand that. I cannot see the logic in his argument that a cliff edge is necessary for the outcome that he wishes to see.
My hon. Friend makes a compelling argument about universal credit being an in-work benefit for many people. I have been inundated with calls from constituents who are supermarket workers, teaching assistants and carers. They are already working long hours and they have gone above and beyond during the pandemic. Does he agree that this is not the way to thank those hard-working key workers for everything that they have done for this country?
I agree absolutely; that is the point. We saw in the exchanges between the Secretary of State and me on Monday, as well as in Prime Minister’s questions, that the Government’s proposition is that somehow people working full time will be able to work 50 or 55 hours a week, on top of what they are already doing. The Opposition are more than happy to have a discussion about raising pay—we have plenty of ideas. Let us discuss raising the minimum wage to at least £10 an hour now or reducing the universal credit taper rate so that people keep more of what they earn. To dress up this devastating cut as a choice between supporting jobs and supporting families is an insult to the millions of working people who will see their incomes drop. Hon. Members who support the cut should at least have the decency to stand up and say so rather than hide behind straw men.
I will give my hon. Friend some statistics from my constituency, where 37% of all children—that is 6,802—are living in poverty, a figure that has increased considerably under the Tories. Thousands of them and their families rely on universal credit to put food on their tables. With the latest figures showing inflation rocketing, and that is very much on food, does my hon. Friend agree that adults and children will go hungry if the Government do not do the right thing?
My hon. Friend is absolutely right. However, it is also important to say that there are 1.7 million people this will affect who cannot work, owing to disability, illness or caring responsibilities. I have not heard a single mention of them from the Government, or the offer of any help coming their way to mitigate this cut.
The Government said at the time they increased the universal credit payment that it was to pay for essentials during the pandemic. I take that to be food and fuel. Does the shadow Secretary of State believe that food and fuel prices have fallen since the pandemic, and if not, does that not just do away with the Government’s argument altogether?
I am grateful to the hon. Member, who makes two points: first, if the Government believed this level of need was evident during the pandemic, the crisis that people face—whether that is illness or redundancy—does not change whether or not there is a global pandemic; and crucially, yes, he is right that fuel costs are going up. We had the announcement this morning that inflation is over 3%. Anyone who has been to a British supermarket in the last few months knows how much food is going up, so the need is absolutely there. Frankly, the Government’s case that somehow this support was needed in the pandemic and can be taken away has absolutely nothing to it.
That brings me to one more point I want to raise before I talk about the impact on people. I want to highlight again the situation for people on legacy benefits, such as employment and support allowance and jobseeker’s allowance, who never had this uplift to begin with. I believe, and I have said so many times, that these people are the victims of discrimination. Universal credit is the clear successor benefit to these benefits, and the decision to not uprate them was initially presented to this House as a technical problem, rather than a policy choice. The situation they have been put in is grossly unfair, and we will continue to keep raising this. The only reason I did not include those benefits in the wording of this motion today is that I did not want any Conservative MP to be able to cite that as a reason to refuse to back this motion.
It is the impact on people that should be paramount in our minds. I am sure all hon. Members, whichever side they are on, have been inundated with people getting in touch to tell them exactly how much this money means to them. The leaked internal analysis from the Government that appeared in the Financial Times last week described the cut, in the Government’s own term, as “catastrophic”. The human cost of taking this money away cannot be overstated: £20 may not seem like much to some people, but it is makes the difference of having food in the fridge and still being able to put the heating on, or being able to get the kids new school shoes without worrying how to pay for them.
My hon. Friend is making a very powerful speech. In Oldham, there are over 11,000 people in work reliant on universal credit with 22,000 children. Is he as concerned as I am that the long-lasting impacts of driving these children into further poverty—as we saw, for example, in the Nuffield Foundation report yesterday—are going to be detrimental not just for those families, but for society as a whole?
My hon. Friend is my constituency neighbour, and she knows that her constituency is very much like mine. We have seen the impact of the austerity years and what that has meant, not just in terms of the impact on people, but with how much need that has pushed on to other services—the NHS, the police force—and, frankly, with how so many of the preventive services that were once there have had to go from local authorities. The position people are in, as things stand today, is not one in which anyone could reasonably say that there is capacity to further reduce support and take so much money out of local economies.
According to the Resolution Foundation, over 40% of people on universal credit were food-insecure before the Government introduced the £20 uplift, so does my hon. Friend agree that by cancelling the uplift and cutting universal credit by £20 a week, the Government are taking the money from people that they need to put food on their tables and to support their families?
Again, no one could dispute that case. Last week I went on a visit to Peterborough, which is the Conservative constituency most affected by this cut, and I went to volunteer in a local food bank. Anyone volunteering in that situation and simply observing the level of need coming through the front door could not in any good conscience say that the people going there could sustain themselves if this cut were to take place. Some of the volunteers there are people who work for the NHS, who in their spare time are volunteering on the vaccine programme and, in their spare time from that, are volunteering at the local food bank. That is what the people of this country are doing, and if only they had a Government who were willing to give the same level of commitment, how much better things would be.
My hon. Friend is making an extremely powerful speech. We have been through a period when communities have come together, and he has just talked about volunteering and the way that communities have come together to deal with food poverty in particular. Children have been involved in that, and this is the Government who failed to feed our children during holiday time, so it is no surprise that they are bringing in this cut. Even in a constituency such as mine in London, over 5,000 children live in households that receive universal credit and are going to face a cut on top of what we have all been through over the last 18 months. It really is time that this Government started to think about the consequences of what they do to the poorest people in our communities.
Again, I think the case my hon. Friend has made is self-evident. I would also say that if we look at the moments of national crisis in British history and at how the country has responded to those, we see that we have always sought to learn from those crises and to take the best bits of our response to them. This announcement from the Government—the debate today—is their saying, “There’s nothing to take from this; there is nothing to keep that sense of solidarity or that action to try to improve things for people, and we are walking away from it.” I think that that, perhaps more than anything else, is what makes so many people frustrated with the tin ear the Government are showing.
Erdington may be rich in talent, but it is one of the poorest constituencies in the country. Some 63% of working age families with children in my constituency face a £1,040 cut in the biggest overnight cut to social security in the history of the welfare state. Does my hon. Friend agree with me that the Government seem to be oblivious to the despair of mums and dads who are wondering how they are going to be able to feed their kids as a consequence of soaring bills—electricity, gas—and prices in supermarkets, and that at a time like this this cut is truly the cruellest cut of all?
Again, I am pleased my hon. Friend has been able to place this on the record for his constituency, because that is how everybody sees it.
Last week I met some of the families who gave evidence at the Work and Pensions Committee—great people, real people—and they told it exactly how it is. On Monday, the Under-Secretary of State for Work and Pensions, the hon. Member for Colchester (Will Quince), tried to say this actually is not a cut because the Treasury never budgeted to keep the uplift in place. Let me tell him that it is a cut to those families who came here to give evidence in the session last Wednesday, and it is a cut, as hon. Members have said, at a time when other things—the cost of heating, the cost of food, the rate of inflation—are already going up in real terms. Let us in this debate deal with the reality of people’s lives, not with Treasury fictions.
I took a moment to look back at some of the calls the hon. Gentleman has made over the last couple of weeks to increase benefits. When I added them all up, I found that there is not just the £6 billion for this benefit, but a total of about £15 billion that the Labour Front Bench has called for. Can he tell us how we are going to pay for that, because it is real people who will be paying for those benefits?
I will tell the hon. Member about the real people. There are 7,700 families in his constituency whom this cut will affect, and the decisions the Government will make—[Interruption.] I am not going along with Conservative Back Benchers trying to tot things up and coming out with them in the middle of a debate. No, let us talk about the real impact on the 7,700 families in his constituency. The message he should be considering is: what will happen to his local economy and what will happen to national finances by taking that money away from them? This is a very important point.
Some 7,850 of my constituents will in three weeks’ time also lose £20 a week. Does my hon. Friend agree that the real cost will be the impact on people’s lives—the lost opportunities for those children’s futures and the hopes we all carry? Is it not right that we invest in people, not see this as a cut in itself?
Absolutely. That investment in people is essential, and this uplift that we are talking about today cannot be considered without remembering the benefits freeze that lasted for four years prior to 2020. As the former Secretary of State, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), has said, the uplift only really restored what the value of UC would and should have been.
The pandemic exposed what many of us already knew: that social security in this country had become so threadbare it simply would not have got us through the pandemic. Since 2010 there has been unprecedented growth in in-work poverty in the UK, and food banks have become the norm in every town and city. No constituency has been exempt from that, and, most of all, one in eight working people in the UK is currently living in poverty. So the Government should not be seeking to congratulate themselves on making this uplift during the pandemic; they should ask themselves why they let things get so bad to begin with.
There was another laughable moment in Question Time on Monday when the Secretary of State compared the Government’s response to that of the Labour Government after the global financial crisis. Back in 2008 there was a functioning and supportive welfare state: tax credits acted as a superb automatic stabiliser; Jobcentre Plus had already been created, bringing together the old social security offices with the jobcentres, which all Governments since have recognised as a huge strength; unemployment did not hit 3 million, as initially predicted; and initiatives such as the future jobs fund played their role. So that Government had already done the hard work back then, and that is the lesson this Government need to learn.
As many Members have said, great as the impact on families is, we also have a responsibility to consider the impact of this on the country as a whole. The money we are talking about is spent in local shops and on local services, the very businesses that have had such a tough time because of the necessary public health restrictions most of us here backed for good reasons.
The recovery is promising, but it is not a done deal and there is a lot of ground to make up. This is the wrong decision for the economy and it also fails to learn the lessons from the pandemic and build the resilience we need as a country to face future challenges.
I absolutely support everything my hon. Friend is saying in his speech, and the Government should listen hard, because we have all lived through a very difficult 18 months and there are increasingly difficult times ahead as well. We have learned many lessons during this period, such as that we should invest more in the things we value most. This money is targeted at families; 40% of families with children in my constituency will lose out as a result of this decision, and that will have an impact on those children. We have one of the most expensive childcare systems in the world and we know that working families are struggling. The Government can do something simple to support those families by changing their direction on this cut today.
My hon. Friend is right. The lever the Government have to alleviate this basket of problems—childcare costs, fuel costs, food costs—is to not go ahead with this decision.
My hon. Friend’s intervention brings me to my next point. If it really is the Government’s ambition to level up the UK, it is hard to see how that can mean anything when this cut disproportionately affects the places the Government say they want to boost. Despite all the rhetoric, this cut will take £2.5 billon out of local economies in the north and the midlands, including Stoke-on-Trent which would lose over £32 million and Blackpool which would see £23 million cut.
We all know this money is not being invested or hidden away; it is being spent. It is being spent in shops and restaurants in local high streets that desperately need a boost after last year. After the last week, it seems that the Government are keener on taxes up than levelling up.
On the hon. Gentleman’s comments about the last Labour Government and the 2008 financial crisis, what support did that last Labour Government give to those families?
Actually, that is a really important point because the hon. Gentleman was guilty in his comments on the previous welfare system of looking at it through rose-tinted lenses. There were huge problems with the previous welfare system. It caught hundreds of thousands of families in poverty traps, and at every opportunity since 2010 the Labour party resisted our efforts to reform welfare, to make work pay and to provide better financial support for families in Britain.
I have a lot of time for the right hon. Gentleman, as he knows, and he has been vocal in opposing the Government and we all have respect for that, but I must put a few things on the record in response to his intervention. The reductions in poverty under the last Labour Government were tremendous, and we did not even know how good they were until we got the evaluation, sadly a few years later when already so much of that had been taken apart. Of course there were problems with the previous system, but no one should try to claim that the last Labour Government were not a reforming Labour Government. As the right hon. Gentleman knows, after that Labour Government came to power a single parent did not have to go out and look for work until their eldest child was 16—there was no regime in the world like that—and Jobcentre Plus did not exist. So there was a lot of reform and the system was improved, but crucially—this is the big difference from the reforms of this Government—our reforms brought poverty down, brought more people into the workplace, and made this country stronger, more resilient and a better place for everyone. That is why, sadly, our record is overwhelmingly better than this Government’s.
I have dealt with this intervention before—being involved in so many Finance Bills does give that experience—and that is false; a quick Google search will put the record straight for the hon. Gentleman.
The great Labour Government after the second world war who created the welfare state, built 1 million council houses and created the national parks while having to deal with demobilisation after the war are not hugely relevant to people who want to cut £20 a week from 6 million families today. But I will always defend the post-war Labour Government, the greatest Government in the history of this country.
No, we have had enough history and the hon. Gentleman has intervened twice; we can look forward to his speech.
In relation to the tax rises announced last week, the combination of this cut and the rise in national insurance is absolutely outrageous. As many as 2.5 million families will lose £1,300 a year. This Government are already a high tax Government, and due to that and the decision to freeze personal allowances and hike council tax combined with the much lower than expected Government borrowing costs, projections are already coming in for the October spending review suggesting that there is far more room for manoeuvre than anyone previously thought.
The Resolution Foundation, the most respected analyst of the labour market and welfare state in the country, said last week that the Chancellor
“will be significantly boosted by the good news the Office for Budget Responsibility (OBR) will deliver within its updated forecasts on 27 October. Borrowing this year is likely to come in several tens of billions lower than expected, having already borrowed £26 billion less than previously forecast in the first four months of 2021-22. More importantly, if the OBR moves its forecast for the long-term scarring effect of the pandemic on the British economy (currently 3 per cent of GDP) into line with the more optimistic consensus (the Bank of England now expects scarring of just 1 per cent) he will have a windfall that lasts, possibly to the tune of around £25 billion a year.”
I believe the final forecast might be slightly less generous than that, but the point remains that a decision to keep UC and working tax credit at the current levels could be made within the fiscal headroom the Chancellor already has when the spending review takes place.
As the Resolution Foundation made clear,
“To govern is to choose”,
and the question for hon. Members today is do they really believe that those on the lowest incomes, in some of the hardest jobs in the country, who got us through the pandemic, should take a disproportionate share of the burden going forward? Is that fair, is that a recipe for national success and is that ensuring our country is as resilient as it needs to be to meet future challenges? No, no, and no again.
Looking to the future, I want to replace UC with a better system because I recognise that the argument we are having today over the core amount is not the only problem: the five-week wait is a huge issue for people; the level the taper rate is set at is wholly wrong; and people should be able to keep more of the money they earn. Fundamentally, the Treasury caused a huge problem by causing UC to be associated for many of our constituents with austerity, cuts and sanctions, but that is an argument for another day. The choice we have to make right now is whether to proceed with this cut and, whichever way we look at it, we should not. I hear there are rumours that a reshuffle is under way. As Members will know, if a Cabinet Minister were to lose their job today and return to the Back Benches, they would receive a pay-off of £15,000. Will anyone in this debate say that that is unaffordable? It always seems to be a different rule for the people we are talking about than for everyone else in the country.
I implore Members to think about the wide-ranging effects of their decision in this place today. Charities say that the cut will cut a lifeline to millions. Economists say it will suck spending from our local high streets. Even the Government’s own internal analysis makes it clear that it will be catastrophic. No one in this House can say they did not know. No one will be able to say they were not warned. The effects of this cut are clear as day. It is wrong for our constituents, wrong for the British economy; quite simply, it is wrong for Britain. Conservative Members have a choice to make. I, and the millions this cut will hit, implore them to see sense, back the families who sent them here, and cancel the cut.
Just this week, the official jobs statistics showed that more people are getting back into work and there is a record number of vacancies. That is a tribute to the British people and businesses. It shows that our plan for jobs is working. It shows that our comprehensive and unprecedented support for citizens and corporations as well as the NHS, in trying to protect lives and livelihoods, has worked. After the terrible personal and economic impact of covid, boosted by the successful vaccination roll-out, Britain is now rebounding.
It was right that we took prompt and decisive action to support our nation during this challenging time. We had the job retention scheme, the self-employment grants, the VAT changes, the business rates relief, the suspension of evictions for people and businesses who were renting—I could go on. We could only do that, though, because we went into the global pandemic with strong economic foundations built as a result of 10 years of Conservative measures to restore the nation’s finances after the financial crisis on Labour’s watch, when, memorably, there was no money left. Those measures included a sustained focus on supporting people to move into and progress in work through universal credit, with the highest level of employment ever seen in this country just before covid hit.
If this cut goes ahead, with £20 a week taken off universal credit, it will reduce the support for an unemployed family to the lowest level as a proportion of average earnings at any time since the welfare state was established after the second world war. How can that possibly be justified?
As I will probably say a bit later as well, this was indeed a temporary uplift, recognising the financial impact on people newly unemployed and that the uplift would be somewhat of a cushion for their financial circumstances. However, do bear in mind all the other support that we have given to help families get back on their feet, all the other elements that we have used to help people manage the cost of living, as well as the extra welfare grants that we targeted specifically through local councils. They have all been actions to help people, and we are helping people back into work, and better-paid work.
I am going to make a little more progress and then I will come to the hon. Gentleman.
Those foundations meant that we had the fiscal firepower and responsive welfare system to take decisive and unprecedented action in the face of the covid emergency. We delivered a package of over £400 billion to support the British people and businesses through the economic shock and injected over £7 billion extra into the welfare system, increasing local housing allowance rental support by nearly £1 billion, as well as over £400 million of targeted grants for local government to directly help the most disadvantaged and vulnerable families in local communities.
If a constituent comes to my surgery saying that they cannot afford to eat and have to go to a food bank because of the removal of the uplift, does the Secretary of State think they will feel any better when I say, “It’s not a cut; it’s just the removal of a temporary uplift”? What does she say to constituents who are on universal credit for the first time? They will have no idea that this cut is coming.
We have communicated once already with recipients of the universal credit temporary uplift. That has already gone through. The second message is under way, and the third message will be done. I think that we have taken responsible action to make sure that people realise that this change is coming, but of course the hon. Gentleman’s constituent will still be engaging with their work coach about how we can perhaps help them into better-paid work than they had before.
The Secretary of State started by listing the support that this Government have given to businesses, and specifically small businesses, which are very important in my constituency. How can she justify taking £5 million out of the local economy in Arfon?
I have already given way a bit, so I will make some more progress.
Let us recognise that not everyone was fortunate enough to be furloughed; sadly, many people were made redundant. Fortunately, we had the universal credit system, and with the mass efforts of the great civil servants in my Department, we responded instantly to support the millions of people who turned to us for help. I will never tire of praising my Department for how we helped those at their lowest ebb. I know that that would simply not have been possible with the old benefits system. People would have been queuing round the block trying to get into jobcentres, especially in the middle of a lockdown. It may be an inconvenient truth for Opposition parties, which have constantly tried to demonise universal credit, but universal credit proved itself even more during the pandemic, showing that it worked both by design and in delivery.
I, too, pay tribute to the civil servants and the work coaches in the Secretary of State’s Department. That is the point that I want to explore with her. We all understand that unemployment is yet to spike. We expect that there will be problems as a result of the furlough scheme ending. I think that is widely anticipated; indeed, the Government have gone around opening temporary jobcentres and appointing more work coaches until March next year. If the Government understand that unemployment is about to spike, why are they removing this uplift to universal credit right now?
Of course, we now have a record number of vacancies, but we are also about being ready and anticipating. The OBR forecast that there would be a significantly higher unemployment effect as a result of what happened, and it mattered that we had jobcentres and work coaches ready to help people with that. I hope that we can now make sure that our army of work coaches can continue to help just under 2 million people still looking for work to get into those 1 million vacancies, as well as their efforts to help people progress in work.
I am grateful to my right hon. Friend and neighbour, who is making an excellent speech. She is right to highlight the resilience of the universal credit system, but on the point that is made about taking money out of local economies, is that not an insult to John Maynard Keynes? Is it not a fact that if individuals get more hours and better-paid work, there will be more money going into their economies, and on a more sustainable basis?
I would not normally rely on John Maynard Keynes to help the cause, but undoubtedly, there is an element of investment; we are seeing plenty of investment by the Government in our economies and in businesses in support of that, not least the £650 billion programme announced by my right hon. Friends the Prime Minister and the Chancellor earlier this week, which we estimate will generate an extra 425,000 jobs just in the next few years. We want people to have more take-home pay. That is why we have pursued increases to the national living wage, which is now at 60% of median earnings. The intention is that it will reach 66% of median earnings before the end of this Parliament—and that is just the minimum. We want people to have high-skilled, high-paid jobs, and that is why our plan for jobs is all about helping people take advantage of the support that is there.
Spending £6 billion handing an uplift to all recipients of universal credit, irrespective of their circumstances, was never a targeted way of affecting those people who are most in need. That is why it was temporary. When the Secretary of State comes to the longer term, will she consider the taper and the way that childcare costs are met?
My right hon. Friend is right that it was quite a blunt way of quickly delivering instant support, particularly for those most financially impacted by covid, many of whom were made redundant for the first time in their lives. I am conscious that we have still more to do to try to make sure that people can keep more of what they earn. I also have strong views that we need to continue to try to make best use of the funding that goes into childcare. As my right hon. Friend will know, under universal credit 85% of childcare costs, worth up to £13,000 per family, can be reclaimed. That is higher than that possible under tax credits.
Coming back to universal credit, the point has been made by hon. Members across the House that it is a dynamic benefit. It supports people in work and out of work, which is exactly what it was designed to do. People are better off working than not working, unless they cannot work. That is why, automatically and instantaneously, when people started to see a change in their working patterns due to the covid pandemic, it responded to the needs of people already in the system. Those affected saw their universal credit payments rise straight away when they lost working hours or found themselves out of work completely. That is a key part of why the UC system is absolutely vital. I am pleased that the Opposition seem at least to have decided to drop their opposition to that, even if it is just to rebrand. Nevertheless, we decided to somewhat cushion the fall of people made redundant.
Does my right hon. Friend not agree that it would be quite nice if the Opposition actually came here and apologised for year after year, in Opposition day debate after Opposition day debate, spreading scare stories and terrifying the poorest and the most vulnerable in the country by telling them that universal credit would not work? When we were under the biggest strain this country has ever faced, universal credit worked. That is a testament to my right hon. Friend, her great Ministers and the thousands of DWP staff up and down the length and breadth of this country.
My hon. Friend is absolutely right. There are still 3 million people on legacy benefits. We estimate that about half of those people would be better off on universal credit and that a significant number of people would see no change, yet the scare stories and the fear that the Opposition generated are why people are still not transitioning across the system. They will do just that now, because this Parliament voted to end legacy benefits; it voted to have universal credit, so we are still, through our action programme, going to move people across to universal credit. I am with my hon. Friend that many people would actually and substantially be almost certainly better off if they moved. For those people, we have to have a managed migration. We have, of course, already put in place a transitional payment.
The Secretary of State said a moment ago that we are spreading scare stories. Can I say to her—she may wish to comment on this—that talking about the very real impact of losing £20 per week for people who are already struggling is not a scare story, but reality?
I recognise what the hon. Lady says. I am talking about the fact that universal credit has been demonised ever since it was introduced, yet people on legacy benefits—about half of them, we believe—would be financially better off if they moved over to universal credit, regardless of the £20. A significant proportion more would see no change to their financial income. People are scared to move over and that is why there is a missed opportunity for them to access some of the support we have today.
I am going to make some more progress and then I will come back to the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) and my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb).
Returning to the crux of the debate, the temporary £20 uplift was an important intervention to help people facing the greatest financial disruption to get the support they needed. It brought the universal credit standard allowance close to the level of statutory sick pay, the minimum amount required to be paid by employers for people who could not work.
In the Budget earlier this year, recognising that the country was still under restrictions, the Chancellor set out that we would continue covid financial support until autumn, several months after the country came out of lockdown. That helped many people stay on furlough and be connected to their employers as businesses gradually opened, and meant keeping that extra financial support for people on universal credit and tax credits for an extra six months. As our economy continues to recover, it is right that we are investing in jobs and skills to boost pay, prospects and prosperity for people right across the UK as part of our plan to level up and build back better.
On universal credit, I have spoken to dozens and dozens of work coaches all over the country. Every single one of them has told me, without a shadow of a doubt, that universal credit is a better benefit than what was before. It is down to the enthusiasm and the skills of work coaches, to a large extent, that universal credit has been such a success during this very difficult period.
My right hon. Friend is absolutely right. We already had about 640 jobcentres. We are opening a further 200 by the end of the year, recognising that we need to support more people. Of course, work coaches do not just deal with helping people—people with disabilities and a limited capability to work—to get back into work. Work coaches do a wide variety of work to support some of the most disadvantaged and vulnerable. Again, I thank him for paying tribute to our work coaches. They will play a key role in the time ahead. Perhaps the hon. Member for Oldham East and Saddleworth would like to intervene now?
I would be delighted to, although it is not specifically on work coaches. The right hon. Lady is absolutely right that there are winners and losers with universal credit. Last week, the Select Committee heard from four single parents about how they are the losers. I would add that disabled people are also losers. What is the cumulative impact of the cuts to universal credit, the introduction of the new national insurance contributions payment, the rise in food prices and energy bills, and the childcare costs which we have already heard about? What would the impact be on a single parent with two children living on the minimum wage with support from universal credit?
The hon. Lady will know that every individual or household on universal credit has very distinct relationships, which is why we can find households earning up to nearly £40,000 still being recipients of universal credit. It depends on the circumstances. As the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Colchester (Will Quince) said the other day, trying to do some kind of analysis by trying to make individual assessments is just not viable. However, we know, and she knows—
Will the Secretary of State give way?
I will give way to the former Secretary of State for Work and Pensions shortly. The hon. Member for Oldham East and Saddleworth must agree with me that the best way to get more pounds into people’s pockets is through work. We have universal credit work allowances for people with children—this may have covered some of the people who gave evidence to the Select Committee—who have a limited capability to work, so they can keep all the extra money they earn until the allowance is used up and the taper rate kicks in. That is why we have given extra support for people who may not currently be working full time. That is an extra way for them to get all the money they earn for more hours.
I thank the Secretary of State for giving way. A care worker or a low-paid public sector worker—for example, a nursery assistant—who works full time, loves their job and has no prospect of a pay raise any time soon, is now about to be told that they will have £20 a week taken away from them. What does she say to those care workers about why that is fair?
The right hon. Lady is right to praise care workers, who played an important part during the covid pandemic. It is my understanding that half a billion pounds of the health and social care levy, which was passed yesterday—the Opposition voted against it—will go to supporting the workforce in the care industry, recognising aspects of skills and pay. I want to put across to the right hon. Lady that we know—there is evidence on this—that where both parents are working full time, 97% of those households are not technically in poverty. That is why we have such emphasis. Households with children working part time are more likely—substantially higher, closer to 42%—to be in poverty. Frankly, five times the rate of people who do not work at all—workless households—are in poverty compared to those who are working. That is why we have worked really hard to reduce the number of workless households. I think there are 650,000 fewer workless households, lifting children out of poverty.
I will make some progress if the hon. Lady will allow.
We know that the best way to get more pounds into people’s pockets is through work. Those of us on the Conservative Benches believe in a welfare safety net, not a welfare trap, where it feels the Opposition are keen to keep people. We know that work and progressing in a job is the best route out of poverty, and I have spoken about parents working full time. That is why the Government, having provided unprecedented support during the height of the pandemic, are now right to focus on helping people back into work and helping those already in jobs to progress in their career.
Although the legacy benefits system penalised people for taking on more hours, universal credit ensures that working always pays. We got rid of the cliff edge that was part of working tax credits where people were penalised for working more than 16 hours and of the other cliff edges. I repeat that that is why we have UC work allowances focused on people with children or with limited capability to work, so that they can keep all the extra money that they earn until the allowance is used.
I am grateful to the right hon. Lady for giving way. She says that universal credit is responsive, but when she announced this cut, we did not know that there would be a 3.2% increase in inflation. My constituents are in work; it is just that the cost of living in York is exceedingly high. This proposal will hit them significantly, so will she take it back and reconsider in the light of inflation rising?
The hon. Lady represents a beautiful city—a magnificent city—and she will know that the jobcentre and our work coaches are working hard there with the communities. In lifting the local housing allowance rates, we made nearly a £1 billion investment, and we have maintained that in cash terms to recognise some of the costs of housing, which are truly challenging in very popular areas such as hers, and I am sure that she will welcome that.
We are making the most of our 13,500 extra work coaches. Right across the country, we have doubled our jobs army, which is helping people to get into work and to progress in work by accessing skills and job schemes. Our plan for jobs employment programmes are providing tailored support to help more people to move into and progress in work.
Last week, I visited the jobcentre in Warrington and saw for myself the work that the new job coaches are doing, particularly with young people. Does the Secretary of State agree that we need to focus on young people and that that is exactly the work that the kickstart programme is doing?
I agree. Kickstart has so far given over 69,000 young people a foot in the door as they start their working lives. There are more jobs to be filled and we are working with employers to accelerate the recruitment process in that regard.
We also have a scheme called SWAP—the sector-based work academy programme—where people might consider changing their career. The beauty of SWAP is that it is employer-led. We have helped 64,500 people gain the skills that they need to land a job in a whole range of growing sectors. At the end of the training and work experience, there is a guaranteed job interview.
I will make some progress and then come back to the hon. Lady. We also have the job entry targeted support scheme, which, again, provides tailored support, and 138,000 newly unemployed people have got a leg up that way to make sure that they can try to find sustainable work. The restart scheme has recently started. That will provide intensive help, supporting over 1 million jobseekers who have been out of work for over a year. That is not all, but I will give way to the hon. Lady.
I thank the Secretary of State for giving way. Will she explain to the House why, if everything is reasonable and as it should be, her six predecessor Conservative Secretaries of State for the Department for Work and Pensions have all come out against this cut?
I think it is fair to say that in the letter I saw that my six predecessors had signed—they are magnificent people and it is an honour to follow in their footsteps—they were keen to have the extra financial support that has gone into aspects of the welfare system and to help people in that way. It was not specifically about the £20 but about recognising, as has been said today, that there may be better ways of using that financing. I am conscious that the media may have reported that in a slightly different way and I am not going to put anybody on the spot. However, I think they valued the extra money that went in, and I want to continue to support people.
I am grateful to my right hon. Friend for giving way again; she is being incredibly generous with her time this afternoon. The central argument of the letter that we sent to the Secretary of State and other colleagues in Government was about trying to retain the investment in universal credit. There are different ways to spend that money. All the evidence that I have seen suggests that investing in the standard allowance gives us more bang for our buck in protecting families against poverty. It was really a last-ditch attempt by me and a number of my colleagues who had served in that Department to persuade the Government to hang on to the crucial extra investment that had been put in at the start of the pandemic and which has made such a powerful difference to so many poor families up and down the country over the last 18 months.
I thank my right hon. Friend. Anybody who has served in this office, including the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), will recognise, for the people we meet daily, as other hon. Members do in their constituencies, what a difference an intervention from a work coach or a decision maker can make to really boost people when they are at their lowest ebb. I do not know whether any hon. Members watched the series “The Yorkshire Jobcentre” on Channel 4. Our social justice team there go above and beyond in trying to help people who have been rejected by the rest of society to get their lives back on track. That is the sort of work we can do. I understand why my right hon. Friend is keen for the welfare budget to still be substantial in supporting such people.
My right hon. Friend is being very generous with her time. She has been talking about work coaches and how these fantastic people can support people into work and the different people they help. Will she tell the House more about how work coaches and universal credit are helping disabled people back into work?
I will. I am pleased to say that I think there are more people with disabilities in work at the end of the pandemic than there were at the beginning. There is a number of things and I encourage my hon. Friend to read the Green Paper on what we have set out as possible ways forward. We want to make elements such as the Access to Work programme work better in terms of potentially being transferrable. In particular, we have some specialist schemes that we target on people with disabilities, and particular efforts are being made to help people with disabilities to access kickstart. We will continue to try to support people with disabilities to make the most of their potential, as we set out in our broader approach in the national disability strategy.
I will not, because I am conscious that we are nearly an hour into this debate and many hon. Members will want to speak about this important matter.
Right across Government, we are investing to help people to get better-paid jobs, whether that is through digital boot camps, the lifetime skills guarantee, the £650 billion infrastructure programme that will generate 425,000 jobs, the £8.7 billion affordable homes programme expected to support up to 370,000 jobs, and the green jobs taskforce, which goes from strength to strength as we work our way towards net zero. I have referred to the extra funding through the health and social care levy, which will include support for care workers, but we will not stop as we help people to progress in work. This Conservative Government and Conservative party want people to prosper as we build back better and level up opportunity across the country.
Tackling poverty through boosting income is one element and we will continue to support people with the cost of living. We have kept the uplift in housing support through the local housing allowance rates, as I mentioned to the hon. Member for York Central (Rachael Maskell), maintaining it in cash terms this financial year. We spend over £6 billion on supporting childcare, which is equivalent overall to about £5,000 per family. As I said to the House, that can be up to £13,000 per family for people on universal credit.
We have increased the automation of matching benefit recipients with energy suppliers to make it easier for the warm home discount to be awarded almost automatically. I was very pleased to see that more mobile and broadband suppliers stepped forward with social tariffs for people, which is why I am delighted to let the House know that we are working with those suppliers to make it easier for them to verify the identity of people seeking those special discounts. I am also leading cross-Government action to do more on tackling poverty and the cost of living, which will help many families with their day-to-day costs.
We have heard that universal credit is flexible and that people are treated individually. I am very aware of the challenges on food insecurity. That is why we included the questions we did in the family resources survey so that we can start to think about how we can direct our policies specifically to those people. As my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) was trying to get out of the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), what is accurate—I am pretty sure to say—is that, in 2008, tax credits may have changed, but that was effectively for people in work. What we did not see was a boost in the unemployment benefits, so when the shadow Secretary of State criticises us for putting an extra £20 a week in the pockets of people who were newly unemployed, I do not think that his assertion is defensible.
One thing that the House may see in a couple of years is that, although in the last year of the last Labour Government we saw a reduction in relative poverty, that was largely driven by the fact that higher-paid people were unemployed—we saw a shrink in relative poverty simply because of a statistical anomaly. We have to deal with real-world facts and make sure that the provision of cash, by helping people with their income, is really the way to help them to get on in work but also to help them with the cost of living.
It is incredibly generous of the Secretary of State to take an intervention from me on the Front Bench, but if relative poverty is what we are measuring—although Conservative MPs have broadly run away from that measure since saying that they would accept it—I have to say that child poverty in the UK is heading towards 5 million under this Government.
If the Secretary of State wants a discussion about the legacy of 2008, rather than about what is happening today, let me say first that benefits had not been frozen for four years under the Labour Government, so they kept their real-terms value. Secondly, the Secretary of State says that she has put more money into the system, but take the money for housing that she mentioned on Monday. That was not more generosity; it was not a boost; it was funding the level of policy that the Government already had with the 30th percentile. They were not improving on it; they were simply putting in the money that should have been there from the beginning. That is the crucial difference.
The last Labour Government—admittedly that was quite a long time ago and many Members of this House will not have been serving here then—did not build enough homes. Prices were not tackled, money was not well spent and we were left with no money.
The shadow Secretary of State will be aware that I am not a fan of talking about relative poverty, because it is simply a statistical element. However, since 2010, there have been 60,000 fewer children in absolute poverty before housing costs. Children living in workless households were around five times more likely to be in absolute poverty last year than those in households in which all adults worked. We know that full-time work reduces the chance of being in poverty. Overall, there are also 220,000 fewer pensioners in absolute poverty.
When we talk about the legacy of the last Labour Government, we must never forget the sky-high rates of youth unemployment that we inherited from them. Will my right hon. Friend commit to carrying on the brilliant work that she has done to reduce youth unemployment in the midst of this crisis?
My hon. Friend will be conscious that we are making progress right across the country in tackling that issue. I am conscious that we intend to level up. That is why we are doing a lot of work to make sure that communities right around the country, as well as in her great constituency of Sevenoaks, can take advantage of the schemes so that they can get on and prosper.
With the economy rebounding, now is the time to trust in our track record, which delivered the highest ever employment levels before the pandemic. We know that work and progressing in work are the best route out of poverty. We now have a unique opportunity, with more than 1 million vacancies in the labour market, to help people to move into new and better-paid jobs or to progress in their existing job, raising their earnings and building their financial resilience. We will continue to deliver our plan for jobs, because as we build back better and fairer, a working Britain is at the heart of a Britain that works.
It will be obvious to the House that a great many Members wish to catch my eye. I do not think that there will be time for everyone, but we will start with a time limit of five minutes—which, of course, does not apply to the spokesman for the SNP, David Linden.
I want to begin by describing the importance of this debate:
“There are plenty of times where I’m getting such bad hunger pains that I can barely move.
I can last for a while without eating. I’ve been trying to put my mind off the hunger by either doing exercise, or maybe doing a bit of work on my computer.”
That is a quote from Morgan. He is 23 and has spent six months sleeping on friends’ sofas and occasionally on the street. He is currently suffering from severe depression that impacts on his ability to work. As a universal credit claimant, Morgan has stated that the proposal to cut the £20 uplift is
“literally like taking food off my table.”
That is the reality of life in Tory Britain—the reality of a decade of austerity measures and cuts to social security. Morgan is just one of 5,917,053 people, because that is the number of people who are relying on the £20 uplift to universal credit. Throughout this debate, when we inevitably get drawn into the hurly-burly of parliamentary politics, I want us all to keep in mind Morgan and the nearly 6 million people we are talking about, because it is their livelihoods that are on the line and their financial security that is at risk.
We are not talking in hypotheticals. The Joseph Rowntree Foundation’s report lays it bare: cutting the universal credit uplift will plunge 500,000 people into poverty overnight. We all know the impact that the universal credit uplift has had on claimants. The additional £20 per week has been monumental in helping families get by. Audrey Flannagan, who runs the Glasgow SE food bank in my home city, recently told the media:
“If you look at the impact it”—
the universal credit uplift—
“has had on the food bank, last year in the first three months from January to March we saw 601 single people pre the £20 uplift. January to March this year, we saw 151 single people. That’s a massive difference, not all because of the £20 uplift, but a lot will be because of the £20 uplift.”
The uplift to universal credit was desperately needed before the pandemic, and its impact can be seen right across the voluntary sector.
The British Government now have the opportunity to address the failures of universal credit and truly help those who are most vulnerable as we seek to recover from the pandemic. The first step should be to make the £20 uplift to universal credit permanent; indeed, it should also have been extended to those on legacy benefits, who have been so cruelly overlooked and left behind by this Government.
I have heard Ministers defending removing the uplift by repeating the line that it is best for people to get back into work rather than rely on benefits. In fact, the Chancellor himself has said that
“going forward, my view and the government’s point of view is the best way to help people is to help them into work and make sure those jobs are well paid”.
That only goes to show just how little Tory Ministers know about the benefit that they pontificate on. For their benefit, I will explain.
Universal credit supports both those unemployed and those employed on a low income. More than a third of people claiming universal credit are in employment. Of the nearly 6 million people on universal credit, 2.3 million are actually employed. On top of that, a great number of those employed claiming universal credit are parents. The latest figures show that roughly 1.9 million families with children will see their benefits cut at the end of this month.
The Child Poverty Action Group has stated that the number of poor children in working families is on the rise. Even before the pandemic, there were 4.3 million children growing up in poverty in the UK. That is nine children in a classroom of 30—a shocking indictment of Tory Britain. The proposed cut to universal credit will put a further 200,000 children into poverty, including those in working families. It is simply unthinkable.
My hon. Friend makes a powerful point about the impact on families of low-paid workers. We heard this morning that inflation has now gone up to 3.2%. Workers in my constituency now face an increase in national insurance and higher food costs. They are already facing higher heating costs, and let us not forget that many people in rural constituencies are off the grid for electricity and gas, so it is more expensive for them anyway. This cut to universal credit, according to the Government’s own advice, will cause a catastrophe. Does he agree that, for families in constituencies such as mine, the catastrophe will be even bigger?
My hon. Friend’s constituency was one of the earliest areas where universal credit was rolled out, so he is familiar with it, and as a highland MP he is acutely aware of the much higher energy bills. The universal credit cut will probably mean a choice between heating and eating this winter for people in his Inverness constituency. He is right to put that on the record, and I hope that Members who represent constituencies in other parts of rural Scotland will bear that in mind, particularly on the Conservative Benches. It is simply unthinkable that the UK Government are even considering this policy. All MPs must consider whether they want it on their conscience when the Division bell rings tonight.
Whether or not someone claiming universal credit is in employment, the £20 uplift is vital to their income. To quote Morgan again:
“We should not have had to have gone through a pandemic just to get that increase”.
Morgan is right. The most vulnerable people in our society had been suffering for decades, long before the pandemic hit these shores. Years of austerity have deepened the inequality and poverty in our society, and the pandemic has only magnified those pre-existing inequalities. Years of austerity have deepened the inequality and poverty in our society, and the pandemic has only magnified those pre-existing inequalities in our welfare system.
A decade of Tory rule has left workers, on average, £l,000 a year worse off. Analysis by the Office for National Statistics shows that, when inflation is taken into account, the average wage is worth less in 2021 than it was in 2010. Despite the continual Tory mantra that getting people into work is the best route out of poverty, wages continue to fall, and austerity continues to deepen inequalities. The pandemic has only served to bookend the decades of cruel welfare cuts and truly highlight how inadequate support has been.
Does my hon. Friend share my concern about the fact that, while much of the debate focuses on young people and people with children, older people, particularly older single people, will be affected by this cut as well? I have a 60-year-old female constituent with a mortgage whose hours of work have been cut from full-time to 26 hours a week. At her age, it will be hard for her to find more work, and she tells me that losing this uplift will mean the difference between keeping and having to give up the home that she has worked so hard to pay for.
My hon. and learned Friend is right to place on record the impact of the pandemic on not just young people but women in particular, especially older women. On Monday we will have before us a Bill that suspends the triple lock; that is another betrayal of a manifesto commitment from the Conservatives—something that may not come as a surprise to those of us on these Benches.
I want to emphasise the sheer number of organisations that are campaigning for this uplift to be kept in place. One hundred organisations, including charities, children’s doctors, public health experts and research groups, have signed a letter calling on the Prime Minister to abandon the plans to cut universal credit. One such signatory was Bright Blue, a Conservative think-tank; some on the Government Benches are members of that very think-tank. We have also seen a letter signed by no fewer than six previous Conservative Secretaries of State for Work and Pensions who have condemned the proposed cuts. All the devolved Governments have also called for the £20 uplift to remain.
Analysis by the Joseph Rowntree Foundation shows that more than a third of working-age families in 413 parliamentary constituencies will be hit by the cut. Of those, 191 are represented by Tory MPs. The Scottish Conservative MPs on the Benches opposite me—if they have bothered to turn up for the debate—will know the consequences of the universal credit cut that they plan to reaffirm tonight. They know the statistics; they know the threat of poverty that hangs over their constituents; and yet they do not care.
In Moray, 6,110 households will be at risk of sliding into poverty. If he does not vote for the motion tonight, the hon. Member for Moray (Douglas Ross) clearly does not care. In West Aberdeenshire and Kincardine, 3,620 households will be going into winter facing harsh decisions between heating and eating. If he does not vote for the motion tonight, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) does not care. In Banff and Buchan, 6,280 households will have to face relying on foodbanks to feed themselves this winter. If he does not vote for the motion tonight, the hon. Member for Banff and Buchan (David Duguid), does not care. In Dumfries and Galloway, 8,190 households will experience huge anxiety and worry over their financial futures, which will take an immense toll on their mental health. If he does not vote for the motion tonight, the right hon. Member for Dumfries and Galloway (Mr Jack) , does not care.
In Berwickshire, Roxburgh and Selkirk, 7,150 households will have their incomes slashed by £1,040, a figure that has become increasingly necessary during the difficult months of the pandemic. If he does not vote for the motion tonight, the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) does not care. In Dumfriesshire, Clydesdale and Tweeddale, 6,050 households will be victims of this heartless Tory austerity policy, which will cement poverty and inequality in that community for years to come. If he does not vote for the motion tonight, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) does not care. It will be clear that the Scottish Conservatives do not care about some of the most vulnerable people in our constituencies.
My hon. Friend has set out a powerful series of facts. Given what he has just said, does he agree that it is interesting that the Tories in the Scottish Parliament make great play of trying to address the attainment gap, something which cannot be done as long as children are living in poverty? The House of Commons Library tells us that inequality in Britain has been the worst in north-west Europe in every year of the 21st century for which figures are available.
My hon. Friend is right to draw attention to the difference between what the Conservatives say in the Scottish Parliament and what they do—that is, in Westminster, probably not vote for this motion tonight. Of course, there is a wider question: what is the purpose of devolution? Is it meant to be a sticking plaster for bad social security policy coming out of Westminster? The Scottish Government can introduce measures such as the game-changing Scottish child payment, and can go further and double that, but if the Government vote for this cut tonight, it will mean that the Scottish child payment is essentially nullified, and that will be in the hands of Scottish Conservative MPs.
My hon. Friend is making an excellent point about the families who will be affected by this cut. I believe that my constituency holds the record, with 63% of working age families with children who will be affected. Does my hon. Friend agree that, no matter how hard charities, Glasgow SE Foodbank, the local authority and the Scottish Government try to help mitigate that, the cuts from the Tories are so deep that families in my constituency will go hungry this winter, and the Tories will not lift a finger to do anything about it?
My hon. Friend is absolutely right, and I pay tribute to the work that she has done in trying to lobby the Chancellor, who appears to have decided that he will deploy the politics of Margaret Thatcher and pit people against each other. Unfortunately, it is my hon. Friend’s constituents who will feel the wrath of that.
The British Government need to face the reality of what the cut will mean for people across these islands. Slashing universal credit will impose the largest overnight cut in the basic rate of social security since the modern welfare state began. It will mean millions of families being plunged into poverty, facing real financial hardship as we go into the cold, harsh winter months. So when the Division bell rings tonight, my party will vote Aye to this motion, and we will continue to push for these cuts to be cancelled. However, it is increasingly clear that independence is the only way to keep Scotland safe from the cruel Tory cuts that only seek to deepen inequalities and poverty in our communities.
Independence will guarantee Scotland the full powers needed to build a strong, fair, and equal economy, while eradicating poverty and supporting the most vulnerable people in our communities. So yes, we will vote for the motion on the Order Paper tonight, but I suspect that the only vote that will truly end the ongoing Tory assault on social security is a vote for Scottish independence in the upcoming referendum, and, frankly, it cannot come fast enough.
I will keep my remarks fairly short. My views have not really changed since the last time we debated and voted on this issue. On that occasion I voted against the Government for the first time ever, because I felt so strongly about the course of action that we were intending to follow and the impact that it would have on workers on low incomes and their families up and down the country.
The truth about the pandemic is that it has not been a time of increased hardship for everyone. For the lucky few, it has been something of a gold rush; for large numbers of other people, it has been a period of reduced household expenditure and increased household savings. Many people have become richer during the pandemic. However, those are not the people we are talking about this afternoon. Many of the people we are talking about this afternoon carried on working throughout the pandemic. They did not enjoy furlough, or some of the comforts of working from home. Typically, these were people working in supermarkets, doing cleaning jobs or working in the care sector. I believe that as the modern Conservative party, we should be standing on the side of people like that: people who go out to work, who choose to work, and who want to improve their circumstances.
I was surprised when the standard allowance was increased by £20 a week; I had not seen it coming. I was delighted when it was increased, but I was surprised that it had been increased by that amount, and it was not immediately clear to me why the amount in question had been chosen. I must confess that I am not sure that the Government have been very clear about why they picked it, unless it constitutes a recognition that the standard allowance in March 2020 was too low to provide anything like a decent, respectable level of income replacement as an out-of-work benefit. It is that question of adequacy to which I think we will return time and again during the remainder of this Parliament.
I came to the view a while ago that the level of universal credit in March 2020 was too low. One of the key reasons that it was too low involved decisions that I was part of in 2015 to begin freezing that benefit and seeing the value of it eroded at the time. I used some of the exact same language and arguments when I was doing her job that my right hon. Friend the Secretary of State used this afternoon at the Dispatch Box. The assumption at the time was that we were in a time of almost full employment, and we assumed that there would be a virtuous cycle of wage increases and that people would be living demonstrations that work was the very best route out of poverty. That did not happen. Instead, we saw an increase in in-work poverty, and that fact should be profoundly troubling to those of us on this side who really believe that work is the best route out of poverty. I fear that we are in danger of repeating the same cycle of assumptions that were proved incorrect last time.
One reason that in-work poverty increased in the years leading up to the pandemic was, I am afraid, directly related to the fact that we had frozen the main rate of working-age benefits that supported families on low incomes. If we look at the data and the evidence, that conclusion is unavoidable. Anyone who thinks that we have generous benefits in this country is wrong. If we look at this internationally or historically, there is no way we can describe UK benefits as generous. We do not have generous benefits. I do worry—this has come across a bit in the debate this afternoon—about the view that if we can only make welfare just that bit tougher and more uncomfortable for the families who rely on it, we will get better engagement with the labour market and see more people going out to work. The evidence does not point to that either. It shows that a family living in destitution and with anxiety and mental health problems that are a direct result of their financial circumstances is less well able to engage with the labour market productively or to increase its earnings or its hours.
I know that the views of No. 10 and the Treasury are firmly locked down on this, but this is not going to be the end of the matter. We are going to keep coming back to talk about this issue for the remainder of this Parliament.
The right hon. Gentleman is certainly making a very valid point. Does he agree that, with one in four children in Northern Ireland growing up in food poverty and with 22% in fuel poverty, this proposed cut along with the increase in national insurance contributions will plunge people into further poverty and that the Government need to cease with this plan and support the most vulnerable in our society?
The hon. Lady makes a strong point.
We on this side of the House do not believe that benefits alone are a route out of poverty. We emphasise things like work and the importance of education, but what a scandal it is that we are still churning out so many 16, 17 and 18-year-olds whom employers reject and do not want to see because they do not see them as fit for work. We also emphasise the role of communities and the importance of family structure and role models. These are all things that can help to move people out of poverty, and we are not wrong to do that. The Labour party is guilty of over-emphasising the important tool of social security, but I say to my colleagues on the Government Benches that we should not make the mistake of overlooking the importance of good welfare policy. This is not about being wet on fiscal discipline or about being Labour-lite. It is about recognising what is good, responsible social policy, and I am clear in my mind that this sudden, abrupt withdrawal of the £20 uplift that millions of families will experience in the coming weeks is not the right way of doing welfare policy.
I very much welcome the argument that the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) has just set out, and I am grateful to him for reaffirming his support for the £20 a week rise. Like him, I want to focus on the question of adequacy.
If this cut goes ahead, it will reduce real-terms support for an out-of-work family to the lowest level since Margaret Thatcher was Prime Minister. The economy has grown by more than 50% in real terms since then, but the Government’s proposal is that support for unemployed families should not have grown at all over those 30 years. That support will be about one seventh of average earnings, which is, as I said in my intervention on the Secretary of State, the lowest proportion of average earnings it has been since 1948. The Secretary of State made no attempt to justify why it was so low. I invited her to do so, but she did not, and of course it cannot be justified. The House of Commons Library tells us that, if we go back to 1911 when unemployment benefit was introduced, it was set at a higher level as a proportion of average earnings than the system will deliver if this cut goes ahead. The cut will take effect just as we are seeing prices surge, including food prices, as we have seen in today’s inflation figures, and energy bills, with the Ofgem price cap lifted.
The Work and Pensions Committee heard last week from a lone father of two children who told us what this was going to mean for him:
“The uplift sent some relief and for that to be removed is going to leave us with that big question again: do I go hungry, do my kids go hungry or do we keep the house warm?”
Somebody worrying about how to buy their next meal is not going to be able to focus on finding a decent job. Taking away £20 a week will leave the level of support below the basic minimum that is needed and that we require the system to provide.
The cut will hit working families hard as well. The Committee heard from working lone parents who will lose £86 a month from their income. One of them told us that
“if one of the children gets a party invite—which some weeks is my worst nightmare because then I have to find the money for them to be able to do that—it is kind of a case of robbing Peter to pay Paul all of the time anyway. There have been months where I have to decide which bill I am not going to pay this month...you are constantly playing catch-up on utilities particularly...The extra £86 a month has allowed for us not to be doing that so much.”
And that is a parent who is in full-time employment. If this cut goes ahead, it will reduce support for working parents and unemployed parents below the basic minimum that we all want people to have to enable them to look for a job, or for a better job, and to care for their children—things we all want them to do. We will instead be imposing grinding hardship on a very large number of people at a time of surging costs and inflation. Taking away the £20 a week now will mean that the level of support provided will be less in real terms, given today’s inflation figures, than the support that was available going into the pandemic.
The Government have lost touch with what people are having to deal with. The Secretary of State’s claim that people could make up the extra £20 a week by working an extra two hours is simply wrong. Governments do lose touch, but this House must not. We must retain a recognition of the realities that people are dealing with. We need to grasp what this will do to families, even though Ministers do not. It is not just about numbers on a spreadsheet. Half of those claiming universal credit only started doing so during the pandemic. They are not returning to their former level of support. Many will have to get used to a lower income than they have ever had to cope with, and that will come as a rude shock to those who were convinced at the 2019 election, maybe for the first time, that the Conservative party understood what they were dealing with. Every former Work and Pensions Secretary since 2010 opposes the cut, as the right hon. Member for Preseli Pembrokeshire reminded us. It will leave the system unable to do the job we need it to do, and the House must reject this cut.
The right hon. Member for East Ham (Stephen Timms) talked about people finding jobs and finding better jobs, so I thought I would start by talking about what is happening in the jobs market at the moment. We have seen increasing wage growth and vacancies at a 20-year high, with 1 million vacancies in this country. We have also seen almost record low unemployment—lower than in the US, France and Canada. Those are exactly the kind of market conditions that we want to see to help people to find better jobs. They show how that the plan for jobs—that £400 billion of support that we put into the labour market—has worked. It also shows that we have 2 million fewer people in unemployment than expected. Surely that is one of the best ways to reduce poverty in this country.
I am glad that the hon. Lady is keen to talk about statistics. She will be aware that 2,849 people in her East Surrey constituency are claiming universal credit while in employment. What will she say to them when she marches through the Lobby this afternoon to choose to take £20 a week off their money?
I will talk about the things that I already talk about with them: the youth hub and the work coaches that the Department for Work and Pensions has put into my constituency to help people into work, and the jobs that we are creating in the local economy, which are helping people into work.
Secondly, on skills, not only have we introduced the kickstart scheme, which is helping 2,500 young people a week into the quality jobs we want to see them in, but we have introduced a lifetime skills guarantee. We have improved schools during our period in government, going from two thirds of children being in good and outstanding schools to 86% of children. We have increased the number of job coaches and the amount of money going into apprenticeships and traineeships. These will all set people up to have a good job and a good life.
We are also looking at the root causes of poverty. I assume the Labour party would support the national living wage, which is an extra £5,400 going into people’s pockets since 2010. We are doing things like the troubled families programme and the reducing parental conflict programme, about which I am particularly passionate because, unlike some Opposition Members, I think relationships, not just financial benefits, are one of the best ways to help people out of poverty. That is really important.
I also highlight some of the inconsistencies I have heard today, which I find quite troubling. The Labour party would keep the triple lock, with its 8% rise funded by working-age people. [Interruption.] Let me go through what is happening: 2.5% last year, 2.5% or more this year and back to the triple lock next year. The Labour party would keep it at 8%, funded by working-age people—£5 billion out of their pockets.
Let us talk about pay rises for those who helped us during the pandemic, which the Labour party voted against yesterday. Let us talk about taxes.
National insurance, there’s one.
Let us talk about taxes. The Institute for Fiscal Studies has said that the 2017 manifesto on which many Labour Members stood contained the highest taxes in peacetime—£80 billion-worth of taxes—and that was before the pandemic, so I find it surprising that they are trying to paint themselves as the party of low taxes. I do not think anyone in the country will believe that.
The vision we are trying to present to communities in this country is one of jobs, wages, growth and investment, and those communities are now voting for us because they buy into that vision. Look at people like Ben Houchen, the Teesside Mayor—that is what he is bringing to those communities. That is what people are looking for, and I believe it is the best route out of poverty.
On the face of it, today’s debate is about how we want to protect people’s incomes and stave off the threat of poverty for future generations but, scratching beneath the surface, we see what is really happening. The UK Tory Government have lost sight of what modern work means. They no longer understand the economy in which we live and how to implement policies that futureproof the world of work for tomorrow. In short, they have become stuck in the past, again.
When the Conservative party introduced universal credit, with the support of the Liberal Democrats, it heralded it as a panacea for poverty in the UK, but we have seen UC used as a vehicle for cuts to working wages. Today is no different. The former Chancellor of the Exchequer, George Osborne, repeatedly stoked the idea that those in receipt of welfare were out of work and should be punished, and that they should be ashamed of receiving additional support even when they were in work. Apart from being morally reprehensible, that is utterly wrong. Although the current Chancellor has better polish than the former, he is taking exactly the same path, a path that leads to poverty and the degradation of our local economies.
In my Ogmore constituency, we currently have 7,060 households in receipt of universal credit or working tax credits. Of those, 36% are in work, but the figure I want Ministers to listen to most carefully is that 4,731 children in Ogmore live in a home receiving universal credit. When Conservative Members vote this afternoon, I ask them to remember those 4,731 children whose families will face hardship. Those children have done nothing to deserve the cut that the Conservatives are pushing on their families, apart from being born into hard-working families who are often already working full time and just need this small piece of additional support that goes so far to ensure that their children can eat or live in a warm house. That is today’s modern Conservative party.
These numbers may seem abstract and distant, but each one represents a family who will lose £1,040 a year due to the decision made by the Chancellor and the Prime Minister. That in turn will snatch £7.3 million from my constituency, which is money that would have been spent in local businesses that in turn could continue to employ their staff and hopefully expand.
The pandemic has shown us the power of Government—the power of collective risk and shared reward. These are not just high ideals, they are policies that have been put into action by the Welsh Labour Government in Cardiff with self-isolation payments, financial support for utility bills, free financial advice and debt advice, the discretionary assistance fund, the covid-19 statutory sick pay enhancement scheme, the economic resilience fund and the most generous business rates relief anywhere in the UK. All of this has been done by a Labour Government who understand the modern world, the modern economy and modern household budgets. Comparing this forward thinking with that of the UK Government, we see a stark difference between a Welsh Government who care and a Westminster Government who have no interest.
The world of work is now more insecure, with a rise in zero-hours contracts and agency work being the main driver. The UK Government have rejected calls to overhaul this outdated system and make it one that rewards hard work. Instead, they cling to the outdated dogma that cutting UC will give people the incentive to earn more, despite the fact that many people in receipt of UC are already working full time. Are people meant not to care for their children or see their family? Are they meant to work every weekend? Is this the modern Conservative party?
My hon. Friend is making an incredibly powerful speech that very much reflects the experience of my constituents in Cardiff South and Penarth. Does he agree that these people are also having to deal with a huge increase in food, fuel and energy prices? We are seeing inflation at record levels, having jumped to the highest rate since 1997. These people are having to spend more of their income, at the time of this cut in UC, on food, fuel and other essential items.
I completely agree with my hon. Friend. Today’s figures show that the Government are out of kilter with what is happening to constituents across the land. Do Conservative Members not do a weekly shop like their constituents? Do they not see that prices are rising, whether on fuel or food? These things makes a huge difference, and the Conservative party is condemning families to have less in their back pocket as we approach the autumn and winter months. This afternoon Conservative Members will march through the Lobby and pretend it has no impact on their constituents. You could not make it up, Madam Deputy Speaker.
There are only so many hours in the day. Where are these people meant to find the hours to make up for the cut that the Conservatives are pushing through in the coming weeks? This is why we have seen poverty skyrocket across the country. The cut to UC is simply an old idea imposed on a new generation. If the Government were serious about tackling structural problems in our national economy, they would get to grips with low productivity rates and support investment led by communities, not Whitehall.
Yet again, the Government’s actions stand in stark contrast to their rhetoric. They claim to be levelling up—it would be funny if it was not so serious—but in truth they seek only a race to the bottom. Conservative Members will show their true colours again this afternoon in voting for stale economic thinking, whereas Labour Members will show a fresh alternative for the future of work.
I am an enthusiastic supporter of the levelling-up agenda. It is a flagship Conservative policy, it was a key part of the 2019 manifesto, and it is very much built on the concept of the northern powerhouse, which was established in 2014. The levelling-up agenda can change lives and communities. People often ask what “levelling up” actually means. I think it is quite simple: the goal is to improve people’s lives.
To achieve that, clearly there will be a number of initiatives, on infrastructure—road, rail and broadband; better housing; an improved environment; better health outcomes; and the skills and education agenda, which we cannot get away from and which is vital. In my view, it is also about raising income levels, particularly for the lowest paid. We have achieved much on that over the past 10 years: personal allowances have risen considerably above inflation; council tax rises have been suppressed, particularly in the early years of the Conservative Administrations; the minimum wage has gone up substantially above inflation, improving people’s take-home pay; and, most importantly of all, we have seen the creation of thousands, if not millions, of jobs over the past 10 years, which Conservative Members believe is the best way out of poverty. More money in people’s pockets creates greater freedom for individuals and their families, and can help those families to live better lives.
Last year, along came the pandemic, and the Government’s response has been terrific: the furlough scheme has been brilliant; other supporting measures, on rates and other funding initiatives, have been very beneficial and supportive to the economy, to communities and to individuals; and of course we have had the £20 a week increase in universal credit.
Universal credit itself has been a huge success. It coped extremely well in the pandemic, with the many tens of thousands of applications that all came surging at one point. All credit to the jobcentres up and down the country, and I give full credit to Department for Work and Pensions Ministers for the great job they have done. At the time, the Government said that the measures would be temporary, probably believing that they would last only six months or thereabouts. However, £20 a week—or £1,000 a year—has made a real difference to real families up and down the country, and we must remember that 40% of people on UC are in work, 35% of those on UC are actually seeking work, and probably half of those on UC at present have never known anything other than the rate they are currently receiving; they have got used to having it. Let us imagine somebody on £30,000 a year being told that they are having to take a £1,000 salary cut—they would not be in the least bit happy. This is even harder for those who are on less.
There are consequences of such a cut for the economy of the local areas. In Carlisle, my constituency, there are 8,870 people on UC, so it will take £9 million out of the local economy. I am very conscious that that money would be directly spent in the local economy. I appreciate that the uplift has a considerable cost and fully accept that the Chancellor has some challenging decisions ahead. I am a fiscal conservative and will be supporting many of the measures the Chancellor will undoubtedly have to bring forward. However, I very much believe in the levelling-up agenda, which is one of the great strategic policies of the Conservatives. I fully engage with it and want to support it, and a key part of improving the standard of living of families and individuals is levelling up. As I said at the beginning, it is about improving people’s lives, and retaining the uplift would help to improve many people’s lives. I will therefore support this motion.
As we have heard, the Government’s plan to scrap the £20 UC uplift is causing a great deal of worry and concern for millions of working people across the UK and thousands of my constituents in Halifax. As the Leader of the Opposition outlined at today’s Prime Minister’s questions, this cut is punishing countless essential key workers, who through the weeks and months of lockdowns performed essential and frontline roles, while remaining exposed to the economic uncertainty caused by the pandemic.
The Government may seek to present this as a post-pandemic return to normal, but only yesterday the Health Secretary made it clear in his statement that we are not yet at normal, that the need to manage the risks of the colder winter months was very real, and that further measures may continue to be sought as part of a plan B, as we all keep a very close eye on the data. Instead, this is in reality the biggest overnight cut to a benefit rate in the history of the welfare state, and it is having to be shouldered by working people.
According to analysis from the Joseph Rowntree Foundation, on average 21% of all working age families in Great Britain will experience a cut of more than £1,000 to their yearly incomes, with the midlands and the north of England hardest hit. In Halifax, it is estimated that 56% of working families with children will be affected by the cut. The relationship between this cut and the financial resilience and wellbeing of those families, and the knock-on effect for the fragile, recovering, local economy, is desperately real. Those families do not have the money, meaning it is not spent in local shops or with local service providers. This is a double blow, coming at exactly the wrong time for families and for the economy.
Universal credit is an in-work benefit, and the prevalence of low-paid work is the elephant in the room here. I have long campaigned for an end to the youth rates of the minimum wage, which devalue work undertaken by young people. The Labour party would put a stop to that injustice. A report last year from the Government’s own Social Mobility Commission concluded that there are now 600,000 more children living in relative poverty than there were in 2012. Evidence published earlier this year by the Child Poverty Action Group, also based on Government figures, revealed that after housing costs are accounted for, about 3.8 million children, nearly a third of all children in the UK, are growing up in poverty.
Do this Government believe these cuts will impact negatively or positively on these utterly depressing numbers? Polling published by Save the Children shows that three quarters of families with children on UC have a child under 10, and that 47% of UC claimants do not think they will be able to get by on a budget of £20 less a week. This cut will mean that during the formative years of children’s lives many families will have to make fraught decisions, where they are faced with making a choice about which essentials they can and cannot afford to pay for.
The comments made by the Secretary of State for Work and Pensions about £20 being the equivalent of two extra hours of work per week do not reflect the reality of the situation in my constituency. My office has received a number of often frantic representations from people who have limited capability for work and limited capability for work-related activity, and are therefore not expected to undertake the work commitments expected of other UC claimants. These individuals are not required to work, let alone work extra hours, and yet are also having their payments cut. One constituent contacted my office, saying:
“Until I was forced on to UC, I was receiving ESA…My partner moved in with me and as he was working full time, we were moved onto UC in October 2017. However; my husband suddenly fell ill in April 2019 and was assessed as having limited capability for work. I have two teenage children who also live with us. I have heard the government discussing the withdrawal of this temporary support…today. Their response is that UC is designed to encourage claimants back to work and that they can make up the loss; but I’ve not heard anything about those of us who are unable to go to work due to ill health and what support there is in place for people like my husband and I who cannot work and who need to provide care for each other and financially support our family.”
As we have heard from so many today, the planned cut of the £20 to UC is nothing but a further development in this Government’s self-defeating attitude towards working people. Instead of lifting people out of poverty, they are content to allow the UC system to see claimants remain in a perpetual cycle of in-work insecurity.
It is a pleasure to follow the hon. Member for Halifax (Holly Lynch).
This is not a decision anybody or any Government take lightly. Members in all parts of the House are right to raise the real-life cases to which they refer; these are our constituents and the people we are sent here to represent. I have the greatest respect for the former Secretary of State, my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb), and for my hon. Friend the Member for Carlisle (John Stevenson), who I know feels strongly on this subject. He talked about the need to level up through raising real wages. I totally agree with him on that, and I will be coming back to that point.
However, I wish to start by focusing on the opening remarks of the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). I have a lot of time for him. He puts his case in a very reasonable tone, and I am sure he feels as passionately about his views as I do about mine. His argument was, in essence, that Conservative Members do not understand the benefits system and the fact that some people in work receive these benefits. That is very far from the truth. Let me share with him my real-world experience. I have put this point on the record several times in these debates, because it is incredibly important to understand this.
Before becoming an MP, I ran a small business. We decided to award pay rises, and I was shocked when three members of staff declined: one declined the actual pay rise and the other two would not work more than 16 hours. I admit that at that point I did not know about the tax credits system—I had never claimed on it myself and I had not employed people on it—but I then discovered the hard reality of its cliff edges. When two skilled members of staff said to me, “James, I’m sorry but I just can’t do more than 16 hours because of this cliff edge,” I realised the insanity of that—of the state spending billions to put a ceiling on people’s working life and ambitions and on the limits to what they can achieve.
We should never have any ceiling on ambition; we should always seek to enable people to make the most of the natural talents with which everyone is born. That is a fundamental view that I hold, so although this issue is very difficult—I accept that people will be affected, including in my constituency—the Government are, fundamentally, doing the right thing.
We have to consider three key points, the first of which is the impact on individuals, which is the hardest part. It is a question of the extent to which one has faith that individuals can work the extra hours, and that in a vibrant economy with 1.2 million vacancies they can recover that income—and far more, over time—either by working more hours if they are in work or, if they do not have a job, by moving into work.
Just short of two hours ago, the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), asked the hon. Gentleman how many households in his constituency will be affected by this cut; has he been able to work that out in the past two hours? If he does not know that figure, it would be reckless for him to go through the Lobby today and vote for this cut to his constituents.
That was quite an odd moment because, as the hon. Gentleman will have noticed, I intervened on the shadow Secretary of State and, slightly cheekily, he then intervened on me, in a completely novel form of Commons procedure. No, I do not know that figure off the top of my head. I represent those households in this House and I know some of them, and we all know that this change will cause issues. This is not an easy decision, and, as I said at the beginning of my speech, it is not taken lightly, but I have faith in our economy. There are 1.2 million vacancies and the owners of small and medium-sized enterprises—such as me—and the owners of big businesses are crying out for labour. They are desperate for staff.
On 5 August, the Governor of the Bank of England, Andrew Bailey, said something incredibly important:
“The challenge of avoiding a steep rise in unemployment has been replaced by that of ensuring a flow of labour into jobs.”
What a position to be in. At the start of the pandemic, we were all fearful that we would see a huge rise in unemployment—probably one of the biggest in generations. The peak was predicted to be 2 million higher; that is an entire recession’s worth of unemployment. I am proud of what we have achieved in keeping unemployment far lower than that, because it is so damaging.
On the impact on individuals, therefore, we must look to the economy and the extent to which people can work the extra hours to make up the lost income, which I am confident people can. The second key point is the impact on the public finances. It would be extraordinary for us, who are charged with being in Parliament to hold the Executive to account for the moneys they raise, not to consider that impact. The hon. Member for Stalybridge and Hyde said from the Labour Front Bench that we could use the headroom to fund the £6 billion, which basically means borrowing the money. But this commitment will be permanent. The hon. Gentleman wants to use what is potentially a short-term position in the public finances to fund a permanent increase in the welfare state.
Here is the context. Labour has said that, one way or the other, it will keep the triple lock—perhaps not the exact scheme, but it would cost several billion pounds more than the cost of the decision we have made. Labour has also said that it would keep the overseas development spend at 0.7%. Those commitments amount to more than £10 billion, and possibly to £15 billion. It is not good enough simply to say, “Use the headroom.” We know what happened when we had a Labour Government who were irresponsible with public money: we had the great recession and all that that meant for people’s livelihoods and for the poorest in society in particular.
The third key point is the impact on the wider economy. As the Governor of the Bank of England said in the quote that I read out, the issue that we now have is not mass unemployment, as we all feared, but a lack of workers. In many ways, that brings its own headaches. Going back to the point made by my hon. Friend the Member for Carlisle, the upside is that we could be moving into a new era in which those on lower wages see much higher real-terms pay growth than they would otherwise have had. That is an incredibly important development. The focus of Government policy should be to improve real wages, bring unemployment down even further, manage the public finances responsibly and drive the economic recovery forward. That is the correct thing to do.
Like many MPs, I have heard from many constituents who are dreading the day, in less than a month from now, when they will lose the uplift they are relying on to feed themselves and their families and to pay their bills. The £20 a week is the difference between them holding their heads above water or not. The people who have written to me—some single parents, some living with a disability, but all struggling to manage despite working long hours—struggled to make ends meet even before the pandemic struck.
Analysis by Centrepoint shows that the cutting of benefits next month will hit young people the hardest. The charity has warned that there will be more homelessness when people will have to choose between eating, paying their rent, feeding themselves or feeding their children. It is truly shocking that so many people in the UK and in my constituency are grappling with the reality of these cruel choices every day.
A single mother wrote to me to say:
“It cannot be right for the Government to take away £20 a week from the precarious incomes of families like mine. Instead, it should keep it and ensure that families on legacy benefits are no longer excluded…While I realise some of these measures have to stop now life is returning to normal for many people, there will still be a high number of people like me who will be left struggling to get by. I am very stressed about the prospect of facing a financial crisis and possibly even destitution and homelessness due to this cliff edge in support.”
When the Chancellor announced uplifts to universal credit and working tax credit in March 2020, it was an admission that welfare levels were not adequate to protect families from poverty after a decade of cuts and freezes. In Great Britain, 4.3 million children are living in poverty. That is a shameful number, and I fear that sometimes we do not visualise the trauma, pain and everyday struggles behind such numbers—parents whose bank accounts are emptied on payday, once bills and rent or mortgage costs are covered, leaving the long month ahead over which to stretch the pittance left to cover all other costs.
I would like to know which living costs are going down to mitigate the loss of the uplifts, because we are all experiencing the costs of this Government’s policies. Prices are going up. Food retailers are fighting to keep their prices down as far as possible, but mounting pressures from rising commodity and shipping costs, as well as Brexit-related red tape, mean that their efforts will not be sustainable for much longer, and food price rises are here to stay.
The cut to universal credit and working tax credits will be the biggest overnight cut to the basic rate of social security since the foundation of the modern welfare state. Cutting them now, when all other Government support nets that were introduced to help us through the pandemic are also ending, and when some of the poorest in society will disproportionately bear the Government’s new tax levy, is illogical and will be unnecessarily devastating to many of my constituents. It is short-sighted and should be reversed.
At the start of the pandemic, the Government were right to move very fast, without any prompting, to introduce the £20 uplift to universal credit. Now that we are hopefully in the tail end of the pandemic, it would be wrong to hastily remove the uplift. Yes, there is a need to be fiscally responsible and balance the books, and thus policies are being introduced in this September sitting that sit uncomfortably with many of us. However, at the same time we have a duty and a responsibility to protect those on the lowest incomes and the most vulnerable in society. All the evidence shows that a sudden reduction in income of this magnitude will hit a lot of people very hard.
Before the introduction of the uplift, the annual uprating of universal credit had been frozen for four years. Now, looking forward, families are faced with rising costs on all fronts: food up; fuel up; rent up; childcare costs up; and getting to work, particularly in East Anglia, a real challenge. The rise in housing costs in particular is driving in-work poverty. For those in work, for those unable to work and for those between jobs, universal credit should allow people to live with some dignity without descending into spiralling situations of poor mental health, debt and poverty.
The introduction of universal credit over the past 10 years has been incredibly challenging, but, when it was really needed during the pandemic, it worked incredibly well. No sensible voices are now calling for it to be scrapped. What we now need to do is to complete the task of welfare reform. The best way to do that is to retain the uplift, which is targeted at the poorest, helps people to stay afloat and then enables them to make positive decisions to improve their circumstances and to improve their lives.
We are fortunate, as we have heard, that there is a strong jobs market at the moment, but, unfortunately, there are people who are too far away from the labour market to take immediate advantage of these opportunities. Our welfare system should provide them with stability and security so that they can acquire the skills to move into work and then to climb up the ladder to rewarding and better paid jobs.
Universal credit has been the flagship of the Government’s essential work to reform welfare. The scale of the task means that there are still many challenges to overcome to ensure that it works for everyone. The pandemic has put the system through the sternest of tests and it has worked well. We now know that it can cope under crisis and, with an increase in support, it is a system that can better protect families when they face hardship.
At the current time, we face challenges unprecedented in peacetime. In economic terms, these are: building back better from the pandemic; levelling up, so that all corners of our four countries can share the proceeds of growth; and eliminating that stubbornly wide productivity gap.
Investment in infrastructure is important, but what transcends that, and what is absolutely critical, is investment in people. Retaining the uplift will help prevent many people from falling into poverty and despair. It will also provide the platform from which families can plan for better futures and then realise their aspirations. As a society, and as an economy, we will all be better for that.
I suppose £20 a week may not seem like a great deal of money to many Members on the Government Benches. It is the sort of sum they might spend on a bottle of wine or leave as a staff tip in a fancy restaurant, but for 8,923 people in my constituency of Edinburgh East, it is a very great deal of money indeed. I am talking about people like Nicola, a 33-year-old mother of two, whose partner is in work but does not earn enough to get by without the support of universal credit. The £20 uplift over the past 18 months has been vital for her. She has used it to buy formula for her newborn baby. Then there is Megan, a single mum, who works 24 hours a week as a cleaner and cannot get by without universal credit. She wrote to me to explain that the uplift for her meant that she could stop using the local food bank. If it is taken away, she will have no recourse but to go back to it.
I know that it is probably difficult for a Cabinet made up of so many spivs and millionaires to empathise with people like Megan and Nicola, but it has a responsibility to do so and it shirks that responsibility if it does not pause this policy and reconsider its impact—an impact that will reach to almost 6 million families in every part of this kingdom. I agree with the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) who spoke earlier when he pointed out that this long, difficult last 18 months has not been a situation where everyone has borne the misery and the burden of the pandemic equally. There are some indeed who have done quite well. I know the wealthy were fearful at the beginning when they saw the share prices tumble, but, perversely, the share prices are now at record levels and dividends have never been better. For those without capital, this has been a very, very difficult time.
I want in particular to look at the army of low-paid workers who have been responsible for getting us through this crisis: the people who have cleaned covid away; the people who have cared for our sick; and the people who have delivered and maintained essential lifelines during this pandemic. These are people who have not benefited from the furlough scheme; they have been working every day. They are people who have not had business grants or rates relief, and, such is the shameful wage inequality in our society that many of them are in receipt of universal credit and the only thing that they got was the £20 a week uplift and now that is under threat of being taken away. These are people to whom we owe a debt of gratitude. The Government should give these people their applause and their thanks and give them a reward. Instead, these people are getting a kick in the teeth.
There has been a lot of talk about the cost of this. A figure of £6 billion has been suggested as what it would take if this resolution were passed. That is the maximum estimate, by the way, assuming that everyone who is claiming at the minute continues to claim. Six billion pounds is a lot of money, but it is 1.5%—one and a half per cent—of the £400 billion that this Government have deployed during the pandemic. It seems ridiculous that this should be the first thing that is withdrawn, especially when we consider that this measure was brought in as an emergency measure to deal with problems arising from the covid pandemic, because the covid pandemic is most definitely not in the rear view mirror. The covid pandemic is still with us, which is why this policy should be cancelled.
Finally, let me mention the situation in Scotland. It is particularly cruel that, just as the new Scottish Government are bringing in a remarkable ground-breaking new benefit in the form of the child support payment in Scotland to tackle child poverty, the effect of that policy will effectively be wiped out by this cut in the universal credit uplift. There is not much that the Scottish Government can do about that when 85% of all social security spending rests here, but there is something that the Scottish people can do about that: they can choose not to go on living in this state with this Tory Government. They can choose to govern themselves, and that is another reason why they will choose independence in the referendum that is shortly to come.
It is a pleasure to be able to speak on this very important subject.
I wish to put on record my thanks to the people who work for the Department for Work and Pensions, particularly those in the Weybridge jobcentre whom I visited just a couple of months ago. The passion of the people who work there, supporting people and helping them back into work, is absolutely incredible. Before I got into politics, my view of jobcentres was as quite negative places, but that jobcentre in Weybridge is a place of real hope and opportunity, and its staff do incredible work.
The pandemic has thrown us incredible challenges. Sadly, many of my constituents lost their jobs, and people faced increased costs. They found it difficult to reduce their cost of living in response to changing circumstances because of the restrictions that were put in place, and the job market completely went under. On that basis, it was entirely right for us to impose a temporary uplift to universal credit to help people through that difficult time. Now we are in a different situation. The job market is opening up and the difficulties in reducing costs are fewer, but we do have ongoing increased costs of living, and I will come back to that later in my speech.
We are also in a very different fiscal situation. We have borrowed a lot to pay for the pandemic. That has damaged our economy and we still have an ongoing deficit. It is important to remember that most of the money that we are spending now is borrowed, and it will not be us or our constituents who pay it back; it will be their children and our children who are paying that back in years to come. That is a big problem, of which we need to be mindful.
We have limited resources, and it is right when we are using them that our first priority should be throwing everything we can into supporting people back into work. I support the Department in seeing that as its priority, with provisions such as the plan for jobs and the kickstart scheme. I support the work we are doing, as we throw everything into helping people back into work, helping people to progress in work and supporting people with disabilities into work to ensure that everyone has the opportunity of a job.
However, as many Members have mentioned, there are a lot of people in work who are still struggling. Of course, I have sympathy for the calls saying that one option is to continue the universal credit uplift, but before taking such a big decision, I think it is worth reflecting on the issue and ensuring that we get the most bang for our buck regarding the money that we spend on this precious resource. We should look a bit at what is going on for people in these difficult situations—those who are really struggling and who are currently in work.
As many Members have already mentioned, the Work and Pensions Committee, of which I am a member, last week took evidence from several people on the challenges that they are facing. It is important to ask people about these issues to find out what is going on. What was really striking to me was that every witness who spoke to us was a single parent. When we started to delve into the challenge they faced, the cost of living came up big time, of course, but they particularly mentioned the cost of childcare and difficulties getting childcare. One witness, who was very impressive, explained that she pays £300 for childcare every month, which really blows out of the water the extra £100 she gets in universal credit uplift. That is in addition to all the other costs of living, such as the largely unaffordable rented housing that we have in this country.
I think that, like me, my hon. Friend would prefer to keep the £20 uplift, but we know that it is about £6 billion, which is 10% of the defence budget. Would he support the Minister pressing, in the spending review, for a sum of money—perhaps to improve the work allowance and taper rate—to help just the people he is talking about?
Of course, the taper rate—which essentially operates as a participation tax of 63%—is an issue that I hope the Minister and the Department look into as they put forward bids to the Treasury.
Let me return to the cost of living. The cost of childcare is really striking. Our childcare market really is broken. Despite multiple Government support and intervention schemes, people still see childcare and caring responsibilities as a barrier to getting into work and a cause of ongoing financial hardship, either because they cannot get it full stop as it is not available, or because of exorbitant costs.
I remember knocking on people’s doors many times while campaigning in different parts of the country, and people telling me that they would love to work but that caring responsibilities were a barrier to their getting into work. That is a fundamental wrong. We have to do everything we can to support people who want to work into work, and that has to be a part of our efforts on the cost of living.
As well as childcare costs, housing and rental costs in my constituency are huge issues that put people at risk of financial hardship. We really need to tackle the issue of affordable housing, and particularly affordable rents. I beseech the Minister when he winds up the debate to tell me whether he and his Department will look into affordable housing and childcare costs as part of the cost of living review, and push forward some radical reform to help all our constituents, as many Members have asked for in this important debate.
The Government’s cut to the universal credit uplift is beyond a joke and a bad policy decision. The actions of this Government are literally going to starve families across the country. When the Government bring in a jobs tax—the highest tax rise in 50 years—they blame the pandemic, all the while ignoring the stark reality of the effect of the pandemic on the poorest families in our nation. The Secretary of State claims that it was always meant to be a temporary uplift that would come to an end, but let me tell her the reality of the consequences of her Government’s decisions.
The impact of this cut to universal credit could send 500,000 families into poverty, and research by the Joseph Rowntree Foundation shows that it will be my constituency of Bradford West that will be hit the hardest in the whole country. Some 82% of families with children will feel the pinch of this cut—and all this while food prices rise, with supermarket prices rising by 1.3% just this month, marking significant grocery price inflation as supply chain difficulties begin to affect shoppers. For those Tories who disgracefully shame poor families in this country, I am talking about the price rise not on luxury items, but on household essentials. Vegetable oil is at its highest price for over 30 years. The cost of products such as tomatoes has almost doubled in the past year.
Energy prices are set to rise, with households braced for the biggest rise in their energy bills for a decade when the price cap is lifted in October; 15 million customers protected by the cap could see a rise in their bills. Just last month, wholesale electricity prices in the UK soared to record levels, stoking concern that more families would be pushed into fuel poverty this winter. Research from the Trussell Trust on this cut to universal credit found that 1.2 million people say that they are “very likely” to skip meals, and 1.3 million people say that they are “very likely” to be unable to afford to heat their homes this winter if the lifeline is cut.
The story under this Government is not rocket science. It is pretty simple: food prices are rising; energy bills are rising; electricity bills are rising; living costs are rising; the number of families reliant on food banks is rising; child poverty rates are rising; the number of people without jobs is rising; wages are frozen; and this Government are cutting a lifeline to the poorest in our society. This cut is going to hit not just those who are struggling to find work, but those who are already working. Many nurses, primary school teachers, postal workers, retail workers and care workers—our key workers throughout the pandemic—could see on average a loss of £1,790 compared with the past 10 years, according to Action for Children. Single mothers working part-time will be hit by this cut, such as Sophie, who told The Guardian:
“This has felt like my rock bottom”.
At this point, we would expect a Government to support their citizens to get back up, and to provide a safety net, not to burden them further. The same party that dragged its feet to feed hungry children during the school holidays is now taxing working families and taking away the lifeline to the poorest in my constituency. I will not let the Government get away with that.
I hear what the hon. Lady says. She mentions taxes. I agree that taxes are always going to hit people hard, but in order to keep the £20 temporary uplift, taxes will surely have to rise. If she wants to keep the £20 uplift, which taxes would she like to raise?
We have had that debate for hours in this Chamber; I am not going to regurgitate it. It is clear that Members on the Government Benches do not agree and are happy with the tax hike. The tax rise affects those at the bottom end of the scale in terms of work and wages. It does not affect Government Members, as many colleagues commented earlier. The truth is that my constituency is the worst affected in the country—that means the children of Bradford West. When children do not get a healthy meal, they do not learn. When mothers have to make the choice between feeding their children and putting the heat on, that is an absolute shame for our country, which is the eighth or sixth richest in the whole world. That is what we are talking about.
We will not let the Government get away with the gesture politics of clapping for key workers last year during the height of the pandemic, while they now rush through inhumane reforms to the tune of scraping spoons on empty dining tables across the country. That is the reality if this £20 cut happens. I urge the Minister, and not just for my constituents in Bradford West: please do not take this lifeline away from those who rely on it and who have to make the stark decision between food and heating for their children and families.
I thank the people who work in the DWP down here in London and in Thorne in my constituency. I have spent quite a lot of time there and they are doing some fantastic work.
I am proud of many of the schemes that the Government have brought in through the pandemic, including furlough, the self-employed income support scheme and the temporary £20 uplift—and it was temporary, to help people through the pandemic, and it was on universal credit, which is a transient benefit in that people are not meant not to stay on it for a long time; this Government are trying to get people off universal credit and into work.
I know that many people want to keep the £20 uplift, including many of my hon. Friends, but that would cost us £6 billion. I have not shied away from this issue. I have knocked on doors in my constituency and spoken to many groups. I have put myself in the mix with people who really pushed for keeping the uplift, but the question that I have always asked them is, “Where do we get the £6 billion from?” I have asked and asked, and no one is able to come back with an answer. There are places that we can get it from. We can get it from increasing taxes, which affects the people we would end up giving it to anyway. We could end up with further borrowing, but if interest rates go up, we would end up with even more problems. We can take it from another Department. I have asked, “Which Department do you want us to take it from? Do you want to take it from education? Do you want to take it from the police? Do you want to take it from the council?” Nobody comes up with an answer. They want to shake the magic money tree and they never, ever want to give us a proper answer.
I take the hon. Gentleman’s point. I will come to other issues regarding similar things towards the end of my speech.
This Government are trying to help people to get back to work and get into work. I cannot stress how important it is that people work. This debate is about the money, but it is also about the value that it gives an individual when they go to work. We need to take down the barriers to get to work that have been put in people’s way over the years. We need to incentivise people to get to work, which is what the Government are doing with the kickstart scheme, the restart scheme and JETS—job entry targeted support.
I completely agree. We need to get people into work so that they start feeling valued and they are contributing to society, which is what most people in this country want to do. Then, with the lifetime skills guarantee, we can educate them more so that they bring more value to the companies they work for and to the state, and we can increase wages and increase the growth of the country in GDP, so that we can probably lower taxes while still pulling in more money. There will be more people working and so maybe we can get more targeted help for those who really need it.
I have some asks to put to the Government. As I say, we really do need to have some targeted help, because there are people who are going to be particularly hit by this decision. As we have heard, the problem may not be the £20 cut but the benefits system as a whole. Certain demographics really struggle and we need to home in on them as we move forward over the next few months and years. Single people are hit particularly hard. The tapering needs to be adjusted so that it pays to do the extra hours’ overtime that many people need, and want, to do to increase their standard of living. There should be no block on that at all. We need to give some targeted help, and it is important that we look at that, but overall the Government have the right policy. Moving forward from this, we should hopefully see the growth and start getting people into these quality jobs, as the Government want.
Our benefits system in the United Kingdom has gone through many changes and iterations since it was first devised in the Beveridge plan back during world war two. It was felt essential, if there was to be a people’s war against fascism and if people were expected to make the necessary sacrifices, that there would be a fairer future—something that should be borne in mind given the challenges we face with coronavirus at the present moment. Even Winston Churchill was prepared to accept that logic. The system came in with supplementary benefit and the national insurance contributions scheme. It was assumed that supplementary benefit would simply catch a few folk who would fall through the gaps in the system: there would be employment and those who fell from employment would have paid in and would be able to take out before they returned to employment.
There have been significant legislative changes, and there have also been changes to our society and our economy, but the fact is that the system is not working. Some of those who are receiving universal credit are unemployed, but, as many speakers have said, nearly half—certainly 40%—of universal credit claimants are in work. They are the working poor. I accept the logic of what many Conservative Members have said—that the route out of poverty is normally through employment. I have always believed that the best way of increasing wages is to create full employment and that would be the solution, but it is certainly not working at the moment. That has proved to be a mirage and that is the challenge.
I am a child of the ’60s who grew up West Lothian and I now represent East Lothian. There is not just a similarity in name but a similarity in heritage—a coal mining heritage. I lived in a prosperous part, but all around there was poverty as the economy and society sought to transform. However, let me be clear: back then I never saw the poverty that I see today. None of it existed. Were there kids who got free school meals in the 1960s? Of course there were, but there was not the hunger and the queues at food banks. Were there people who huddled next to a two-bar electric fire in winter trying to keep warm? Yes, but not people who would have to make a choice between being able to feed their children, feed themselves and heat their home this winter. Yes, there were kids who went to school with holes in their jerseys or, as we said in Scotland, their gutties—you might describe them as black sandshoes—even in winter, but we did not need to have the clothes banks and we did not have kids unable to go to school because they did not have the clothes to put upon their back. That is the society we now have.
Just last week, I saw a satirical website where there was a spoof: the Secretary of State had declared the majority of Paralympians fit for work. It was caustic but witty. Perhaps it may be reviewed and some may find that they are facing more than a doping test in years to come. That may have been fiction, but the fact has been put on the screen. As Ken Loach has stated, our benefits system is institutionalised cruelty. That has been disclosed on the screen in his movie “I, Daniel Blake”, which won a Palme d’Or. It showed the hardship and cruelty that are inflicted by the system that we possess. That was in 2016, although the film was indeed scripted in the years long before.
We are now in 2021. Our society has never been richer. Some have never had more wealth. Inequality has never increased at the pace that it is today. Yet the level of destitution and despair that exists in some parts is shameful—it is something that we have to oppose. On that basis, I have no hesitation in supporting the motion. The uplift needs to be preserved because poverty is being imposed not by some misfortune but by a political choice, and that is unacceptable.
We have heard the hon. Member for East Lothian (Kenny MacAskill) absolutely eviscerating this disgraceful Government and the way that so many of our young people, whatever corner of the country they live in, live under the brutal face of Tory Britain. This Government are willing to give tax breaks to their rich pals in the City and blow billions on often failed covid contracts, at the same time condemning the young and lowest paid to a lifetime of hardship and debt.
In my constituency—these are shocking statistics—almost 19,000 households are now in receipt of either universal credit or working tax credits. Let me repeat that figure: 19,000. That is bigger than the majority of most Conservative Members. It is an enormous figure. It constitutes 35% of all the households in my constituency and more than 50% per cent. of the families with children. That clearly demonstrates the importance of universal credit, which helps to maintain people putting food on the table for their families and prevent them from being plunged into total and abject poverty. It is grim and it is shocking.
A significant number of claimants are already in work, in poorly paid, insecure, zero-hours jobs. That includes many of the frontline heroes who carried on working throughout the pandemic—nurses, porters in hospitals and people working on buses—while everyone in this House could work from the safety of their own homes. Is this how we repay them, by slashing £1,000 from their pay cheques? Indeed, research by the TUC has revealed this week that 2.3 million low-paid workers will be worse off as a result of this cut, increasing the already record-high poverty levels, and the move will do nothing to address in-work poverty, which is so important and which we should be addressing. Many of my constituents in Ilford are already holding down multiple jobs and doing all they can just to keep their heads above water.
To give just one of the many stories I have heard on the doorsteps of Ilford South, a young woman called Emily told me that she receives universal credit and uses it to support her young son. However, due to a change in her health circumstances, she was eligible to receive further support. She was told to wait three months for a telephone appointment, at which point she was informed that she had to have an in-person assessment. That was despite having doctor’s notes confirming her medical condition, and despite the fact we were in the midst of the second covid lockdown. Now, 15 months on, she is not only still awaiting confirmation of her case, but she faces losing a further £86 from the Government’s proposed universal credit cut.
Emily is understandably struggling to make ends meet. In her latest correspondence, she told me:
“I’m going to be losing £86 a month and I really don’t know how I’m going to survive.”
She speaks for millions of people across Tory Britain and others in similar circumstances. It is a disgrace that the Government are willing to abandon her and millions of others to their fate.
There is now universal opposition to these plans. It comes not just from charities, third-sector organisations and campaign groups—not to mention millions of the Government’s own voters—but six former Secretaries of State for Work and Pensions from their own Benches, including the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), whose constituency is not too far from Ilford, being just down the road in the other corner of Redbridge. They all agree that this money must remain in place. It would appear that the only thing that is truly universal about these plans is the opposition to them.
The Government must think again about their decision to make low-income families pay for the Government’s chronic mismanagement of the pandemic and economic recovery. They are completely and utterly out of touch with ordinary working people’s lives and reducing salaries now risks not only further worsening the impact of the recession, but plunging these people into a lifetime of misery and poverty. The £20 uplift must remain in place at least until after the pandemic is over and the economy is on a stable footing. It is moral, it is just and the Government should get a backbone and do it right away.
I cannot claim to be surprised we are here debating the scrapping of the £20 uplift to universal credit. As the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) alluded to earlier, the fact that universal credit had to be uplifted is surely an admission that the provision afforded to those falling on hard times was not nearly adequate in the first place. Yet in this moment, when we are told that our economy is on the road to recovery, this Government shamelessly pull the rug from under the feet of millions of decent people. It is morally reprehensible and also bad economics. In my constituency of Liverpool, Wavertree, it translates to 11,500 households, affecting more than 6,000 children. That number includes the more than 33% of UC claimants in my constituency who are in work.
We on the Opposition Benches are the party of work and workers. We do not make work pay through a low-wage economy subsidised by Dickensian social security systems, no matter how many times the Government employ divide and conquer tactics through the false dichotomy of strivers and skivers.
I am sorry that the Secretary of State is not here to listen to how this cut will affect my constituents. She grew up in my wonderful city, and it obviously left a very poor impression on her if she is prepared to turn her back on the 62,000 households affected in the city of Liverpool alone, never mind the many more in towns and cities across this country. Let us say it clearly: this is a grotesque act of levelling down. It is levelling down, not levelling up. Indeed, what is “levelling up”, if her Department is prepared to remove £12 million from the pockets of those in Liverpool, Wavertree, £12.5 million from the pockets of those in Heywood and Middleton and more than £10 million from those in Darlington?
As the hon. Member for South Suffolk (James Cartlidge) did not know the figure for his constituency, for the record it is just over £5.5 million, affecting 5,340 households and 4,008 children. It is shameful. I am sure the penny pinchers on the Government Benches are perfectly aware of those sums, but then of course there are those other sums trotted out by the Secretary of State. For someone with a PhD in chemistry, I thought she would have a good grasp of detail, such as how many hours it would actually take to make up the £20 loss in income. It is obvious, considering the bluster and false rhetoric, that she has no coherent strategy to make work pay on the back of this £20 cut. Ultimately, it represents an act of war on the low-paid and the unemployed. The consequences for ordinary people will be grave: more food banks and hunger, more homelessness and more destitution in our communities. I am sure it will provide ample opportunity for the regular circus of Tory MPs taking selfies at the very food banks their policies helped to create.
I am very grateful to be called in such an important debate. The controversial plans to withdraw the universal credit £20 a week uplift are regarded as the biggest single welfare cut since world war two. Anti-poverty campaigners and children’s charities have warned that the cut will be devastating for millions of families already facing the financial cliff edge we have heard so much about.
We have also heard from former Tory Ministers—I am surprised by that, but we have—who have written to this Chancellor, urging him to make the £20 uplift permanent to avoid sending thousands of families further into financial crisis. If these plans go ahead, the cut will hit nearly 6,000 people currently in receipt of universal credit in my constituency of Coatbridge, Chryston and Bellshill. Thirty-eight per cent. of those who will see their income hit are already in employment. They are hard-working people—key workers, food producers, shop workers, security guards and cleaners—thrown on the scrapheap. Some 16% of that number are under 25. It is another hit for the next generation by this Conservative Government.
The Joseph Rowntree Foundation has said that 6 million will face an income loss equivalent to £1,040 a year. Citizens Advice has warned that a third of people on universal credit will end up in further debt. One hundred organisations, including charities, children’s doctors, public health experts and even a Tory think-tank have co-signed a letter calling on this Government to do a U-turn on the planned universal credit cuts. We have seen plenty of U-turns from this Government—let us have one on this issue please. It comes after a month-long campaign led by my hon. Friend the Member for Glasgow East (David Linden) and the SNP for the UK Government to maintain the £20 uplift and extend it to legacy benefits. It follows a letter signed by six former Work and Pensions Secretaries condemning the cuts.
The Scottish Government remain committed to doubling the Scottish child payment to £20 a week by the end of the Parliament. In contrast, the Tories are still planning to go ahead with slashing the £20 despite warnings that it will plunge 20,000 children in Scotland further and deeper into poverty. In my constituency, 26% of children live in poverty. It is a disgrace to allow that already shameful number to grow even further, but the Tories do not care.
On top of that decision, we have another hike in national insurance in Scotland that will most hit those who have least, to pay for a healthcare crisis in England. If that is the Union dividend, for Scotland the Union is a dead end. The youth of Scotland will know that. The Prime Minister and his Chancellor should know that, given the number of U-turns they have had to commit. I will support the motion and hope that everyone else will do so, too.
Low-paid workers are facing not a double whammy but a triple whammy, with prices and bills going up, national insurance contributions going up and now a £1,000 cut in universal credit. Ministers are creating a cost of living crisis for low-paid workers. I do not understand how they think people will manage. On what planet do Conservative Ministers think that that is fair?
One of many emails that I got last week said:
“I am unemployed, 65 years of age and my sole source of income is universal credit. My income will drop from £715 a month (just keeping head above water) to £612 a month (drowning!). When my rent and all other bills are paid, this will leave me with £89 for food, clothing, bus fares for job interviews and everything else for the month. We need help.”
A constituent in Pontefract who is working to support himself and his disabled partner, on universal credit but paying off rent arrears, talked about the pressure that he is already under. He said:
“I don’t know what to do. I have been crying. I have just half a tin of beans left for us.”
In Normanton, Pontefract, Castleford and Knottingley, 10,000 families—nearly half of all families with children in the constituency—will be hit, losing £85 a month or more than £1,000 a year. That means £10 million will be taken out of the five towns’ economy that would have been spent in our local shops when, frankly, our town centres are under real pressure. Care workers, factory workers, warehouse staff, teaching assistants and hairdressers are all being hit.
Ministers say that the answer is for people to work harder and work longer, but they are already doing that, and care workers doing 14-hour shifts do not have any hours or extra days that they can work. Ministers claim that the £20 must go because it was only ever supposed to be temporary, but why? Price rises are not temporary; they are getting worse. The debt that people have run up because of covid is not temporary; it still has to be paid off. The hardship and hunger that children face is not temporary; it is getting worse. Even before the £20 came in, families had lost nearly £2,000 a year because of previous Government cuts. Why do Ministers want to go back to that? That is not building back better.
There is a huge gap between Conservative Ministers’ words and the reality of working people’s lives. The bottom line is that millions of people will be worse off next month because of the Government’s decisions. Some people made more profits during the crisis, and some on higher pay made real savings, but the key workers who kept us all going through the crisis, on the lowest pay, doing the most important jobs, are being hit. Ministers clapped them in the streets; now they are cutting their family income. It is not just a kick in the teeth; it is a complete betrayal. Ministers should have some shame and cancel the cut.
The Government give the impression that they do not think £20 is a lot of money. Although having and spending income is important, it is vital that those who do not have to count the pennies do not forget about everyone else. For many people, £20 is not a box of biscuits from an organic store in west London but what is spent on an entire week’s food shop. The Facebook group “Feed your family on a budget” was set up last year by one woman who managed to do just that on a £20 budget, and that group alone—it is not a unique initiative—has more than 340,000 members. The real impact of taking £20 away from 5.5 million households across the UK is people skipping meals, unable to feed their children, and even more reliance on food banks, which are being used more than ever before—more even than before the pandemic.
On Monday, the Secretary of State suggested that people could make up £20 by working two extra hours. The Government consistently demonstrate that they do not understand that, for many, universal credit is an in-work benefit and that work has other expenses, such as transport and childcare, which mean that claimants will need to work at least another six hours a week to make up for the cut, not two.
Some of my constituents will face a £30 a week loss or even more, because, as we have seen so many times before, the Government have failed to understand the impact of their policies on the devolved nations. Parents who receive any amount of universal credit in Scotland—even as little as £20—are entitled to Scottish child payments, best start grants and best start food payments. Altogether, the cut could mean a loss of more than £1,700 a year. The Scottish Affairs Committee report on welfare published earlier this year noted that there appears to be “a good working relationship” between the Governments, but this cut suggests otherwise.
Of course, “just work more” is never as easy as this Government seem to think it is. There are 1.1 million single parents eligible for universal credit, many of whom need to work part time. I have raised this issue before by asking the Secretary of State to explain the disparity between universal credit and legacy benefits for young parents, where the former benefit acknowledged the additional burden of parenthood and provided the higher rate of payment usually given to those 25 and over. She has failed to provide an adequate explanation to me or 100 charities from around the UK, and indeed other hon. Members, who signed the letter I wrote about this.
The bottom line is that reducing an already inadequate safety net is not going to get more people into work. Research by the Trussell Trust shows that 900,000 people say they will not have enough money to travel to work or essential appointments, and this is a particular concern in rural constituencies such as North East Fife. If people cannot afford to get to work, how are they supposed to get those extra hours? It is a vicious cycle, only worse. Indeed, figures from Fife Council today suggest that crisis applications to the Scottish welfare fund have rocketed since the start of this financial year. This cut is taking place while the effects of the pandemic are still being felt, and we need to make sure that those people and families are supported.
I rise to speak on behalf of the 17,296 adults in claimant households in my constituency who are about to be hit by the universal credit cut, nearly 40% of whom are in work. Before the pandemic, the majority of local universal credit claimants were working, due to the high levels of low-paid work in Hounslow borough and its environs. Many of my constituents who are now unemployed worked in live events in the arts or at Heathrow airport, and the downturn in international aviation since covid has exposed the over-dependence of our local economy on Heathrow. This means that Hounslow has gone from being an area of very low unemployment to having one of the highest levels in the UK.
Behind every one of the 17,296 local claimants there is a person, often with children, and for them the proposed cut will have a very real impact on their households—households already living in poverty. Many have told me what it will mean. One said that the payment makes
“a lot of difference and helps us to eat”.
“Helps us to eat”, in the 21st century in the UK, is disgraceful.
On the one hand we have had Ministers’ weak attempts to defend this cut, but why do they not also mention the countless acts of wasteful spending we have seen over the last 18 months, such as a test and trace system that does not really trace and unusable PPE? We should also not forget the wider context of this cut. As the Government push through this £1,000 cut per claimant, they are also increasing taxes on working people through the national insurance hike and forcing councils to increase council tax, while today we hear of the rise in inflation to 3.2%. Furthermore, in high rent areas such as my constituency, the benefit cap and local housing allowance levels mean that many of my constituents are using the money from their standard allowance, which should be for food and utilities, to pay the rent. As the Leader of the Opposition highlighted at PMQs today, a full-time worker on the minimum wage will need to work for nine more hours to make up for the £20 cut.
Cutting UC on top of all this is not only cruel, but economically incompetent. Some £15 million will be taken out of our local economy in my constituency. We know from research that when there is more money in poor people’s pockets, it goes to local businesses and local shops—businesses that themselves employ people and pay tax. It is such a shame that the Chancellor and his Ministers are not here to lead for the Government in this debate rather than the DWP team, who we hear privately share our concerns about the impact of this cut.
On the final night of the Tory party conference, as the Government wine and dine their billionaire donors, the same Ministers have decreed that millions of our fellow citizens will face the biggest cut to social security benefits since the 1930s. On 6 October, the Government will ram through their plan to scrap the £20 uplift to universal credit, at a stroke leaving 6 million households more than £1,000 worse off a year. By next April, 2.5 million will be £1,300 worse off because their national insurance tax contributions will rise by 10%. In Wallasey alone, more than 10,000 households will lose £10.5 million in support. That money provided a vital lifeline to those struggling throughout this pandemic, many of them key workers. This callous Government have made a political choice to withdraw that support. This is money that is currently spent in our local economy but which will disappear overnight.
The Joseph Rowntree Foundation estimates that these cuts threaten to push 750,000 people into poverty and 500,000 further into deep poverty, which is defined as being more than 50% below the poverty line. There are 6,000 children whose parents are reliant on UC in my Wallasey constituency. This callous cut will be the difference between them putting food on the table or not in the coming months.
Analysis by Action for Children found that almost 30% of children in Wallasey already live in poverty after housing costs. In supporting this cut, every Conservative Member is voting in full knowledge of its effects. The Government’s own leaked assessment has described the cut as “catastrophic”.
So egregious is this cut to UC that six of the Secretary of State for Work and Pensions’ Tory predecessors have spoken out against it, yet she has pronounced herself “happy” that it is going ahead, and yesterday she was being either disingenuous or ignorant when she claimed that just a couple of hours of extra work would make up for the cut. We know that is not true, and we know that while 40% of those on the benefit are in work, some claimants cannot work for various reasons ranging from illness to child caring responsibilities.
In Wallasey 36% of people claiming UC are in employment, and nationally one in six working households cannot make ends meet already. The last decade of benefits cuts has left working families worse off than they were 10 years ago. The pandemic uplift has acted as a vital buffer, and now even this is being taken away.
To govern is to choose; the Conservatives have chosen hardship over hope, and poverty over support. As they sip their champagne and hobnob with their millionaire supporters at their conference, we will never let them forget that.
If this debate was a boxing match, those opposing the motion would have thrown in the towel a long time ago, but I do want to praise all those supporting the motion today including on the Government side. I am, however, sad that some on the Government side treated us to their usual Marie Antoinette routine, saying that somehow people are not trying hard enough and have got themselves into these difficulties.
Some of the contributors from the Government side have said “Let’s talk about jobs.” Yes, let’s talk about the public sector jobs this Government have cut in the last 10 years. They praise DWP staff and I agree, but in the next breath they say, “Let’s talk about pay.” Yes, let’s talk about the pay freeze for public sector workers in the last 10 years and pay restraint, and how many, and why, people working in the public sector are having to get support from the UC system because their wages are too low and the Government have taken that position. Let’s talk, too, about tax avoidance. If the same number of people employed by the Government to tackle social security fraud were tackling tax avoidance and evasion we might get more money in tax and perhaps we would get that £6 billion that we keep hearing about. I believe that the social cost of cutting £20 a week from claimants is far more important, and there will be an explosion in food insecurity in this country. When asked, every food aid provider will explain how nervous they are if the cut goes ahead and what that will mean to the people they support.
The uplift was set by the Government to pay for essentials such as food, energy and fuel. Those essentials have not suddenly disappeared, and claimants were never told this was to be temporary: those who applied for UC during the pandemic were never told at any time, “By the way, some of the money we’re giving you is only a temporary payment.” It is very concerning that those of us on the Select Committee were told by claimants that they had not yet been informed that the £20 was to be removed. If that is the case, I think the parliamentary ombudsman is going to be very busy. This might be WASPI 2. We talk about putting people in jobs; the ombudsman may have to employ many people to deal with all the complaints from universal credit claimants who have not been told that this money is being cut. I will be proud to support the motion and to support my constituents.
It is frustrating once again to have to plead with the Government not to take a key financial lifeline away from my constituents and working families across the country. As so many of today’s contributions have shown, for many hard-working families, the £20 a week universal credit uplift has been the difference between children going hungry and having food on the table, or between turning the electricity off and topping up the meter.
If the Government push ahead with this cut to universal credit, it will affect 6 million families across the country, and it has the potential to push 700,000 more people, including 300,000 children, into crippling poverty. In my constituency of Manchester, Gorton, the cut will directly affect 12,000 children.
This cut will be utterly devastating for my constituents. It will be the single biggest overnight cut to the basic rate of social security since the creation of the modern welfare state. Not only that, but for all the Government’s talk of levelling up, the north will bear the brunt of the cut’s impact. This cut is not necessary; it is a choice that this Tory Government are making. They are choosing to take money out of the pockets of working families struggling to make ends meet. It is a disgrace.
If the Government will not listen to me, my colleagues on the Opposition Benches, their own colleagues, six previous Conservative Work and Pensions Secretaries, numerous all-party parliamentary groups, or endless charities and campaign groups, then perhaps they will listen to the powerful words of one of my constituents. He is an NHS worker claiming universal credit to make ends meet, and he wrote:
“My morale has gone, my head has gone, my heart has gone. Ripped out by a system that doesn’t care for those of us who worked so hard to keep the country together during one of its darkest hours.”
He is not the only one to have contacted me; hundreds of constituents have written to me desperate for the uplift to be maintained. The hard-working families of Manchester, Gorton do not want this £20 a week; they need it. Will the Government listen to them?
Last Friday, a blue plaque was unveiled in memory of Rev. Don Robins, who was appointed vicar of St George’s church in the heart of Leeds at the time of the great depression. Looking around his new parish, he saw the homeless, the hungry and the destitute, and he decided that he must do something. He had an old crypt below the church, and he resolved that it should be used for the living and not the dead, so he turned it into a soup kitchen and night shelter. Since that day, the St George’s crypt has been serving those for whom life has been hard. I sit here and wonder, if he was still with us, what he would have to say about the choice facing the House today. Although the great city of Leeds has seen much prosperity and development in the intervening years, poverty and inequality and hunger have not gone away. They continue to bear down on our communities.
My right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) talked about shame. It is shameful that three in 10 children in my constituency live in absolute poverty. It is shameful that in the three or four miles from the most prosperous to the least well-off parts of our city, life expectancy declines. It is shameful that some children come to school too hungry to learn and that the number of people who have to go to a food bank—that is, after all, going up to a complete stranger and saying, “I know we’ve never met, but can you help me to feed my family this weekend, because I cannot?”—has risen in the last decade.
There is only one conclusion we can reach. The former Work and Pensions Secretary was absolutely right. There are too many households in our constituencies where the money coming in is insufficient to feed, clothe, shelter and look after a family. That is why it is completely unforgiveable that even though Ministers know this—even though they are well aware that poverty and hunger have got worse during their time in Government—they are still determined to go ahead with the cut to universal credit on which so many of our constituents rely, as we have heard today. One woman put it to me like this:
“It may not seem like a lot, but it is absolutely vital to me and my family.”
I am sure there are many Government Members who, as they vote to make the cut today, will know in their hearts it is wrong. But it is what we do, as Don Robins showed, that counts. He committed himself to be where the work is hardest. It is really hard work to raise a family when you want to do your best but do not have enough money. This cut is wrong and the Government should think again.
Order. I am going to make every effort, and I am determined to get everybody in. That may mean that at some point in the very near future I have to reduce the time limit to two minutes, but if we help each other and take less time we might be in with a better chance.
The Secretary of State said that the best route out of poverty is to work. If only that were true. When I came into this place, I knew there would be Tory Members who believed that poverty was a self-infliction, or a “personality defect” in the words of Margaret Thatcher herself in 1978. But I also naively hoped that there might be one or two good people on the Tory Benches who understood that the struggles of many people’s lives were not self-inflicted, but imposed upon them by an economic system that was simply stacked against them and that possibly, just possibly, they might stand up when the time was right.
So I ask Tory Members today: what kind of Tory are they? Are they one who understands that 40% of the 15,000 universal credit claimants in Salford and Eccles are actually in work, work that pays so little they have to rely on Government support to top it up? Are they a Tory who would help my constituent who wants to work, when she says:
“With the amount I would get from Universal Credit coupled with the childcare costs and my potential wages, what I would have left at the end of the month will leave myself and my husband very tight on finances. The £20 uplift makes a huge difference in our finances and my ability to work”?
Or are they a Tory who simply dismisses her, and indeed analysis by the Joseph Rowntree Foundation that shows the majority of families that lose out will be working families who were already suffering before the pandemic hit?
For those unable to work, the situation is even bleaker. The reality is that the basic rate of universal credit is only a sixth of average weekly pay, and many on legacy benefits did not even get the uplift at all. Frankly, rather than being cut, universal credit should be increased to at least 80% of the level of the living wage and the temporary £20 top-up extended to those on legacy benefits.
If the Tories mean it when they say that the best route out of poverty is work, then I say to them: do something about it. Outline an ambitious agenda to tackle in-work poverty, including a higher minimum wage, collective bargaining, secure work, a ban on zero-hours contracts, progression opportunities, and affordable childcare and housing costs. Tory Members, prove to me today that my naive hope that there is some semblance of common decency on the Government Benches is true, and stop this cut.
I rise to speak against the cut to universal credit, which is cruel, illogical and unnecessary. It is cruel because £20 a week makes all the difference to those on the lowest incomes, many of whom are already working all the hours they can but simply cannot make ends meet. Norwood and Brixton food bank, which serves many of my constituents every week with love and care, has been warning for many months that if local people on universal credit are subjected to this cut, the need for emergency food support will increase, placing even more pressure on its staff and volunteers. Our welfare state was established to provide a security safety net for people who cannot make ends meet, yet this Government are taking us back to Victorian Britain, where people forced into appalling hardship by the Government’s failures are reliant on the good will of our communities in ever-increasing numbers.
This cut will cause unspeakable hardship. Parents will go without food so that their children can eat. People will suffer in cold, damp homes because they will not be able to afford the heating. Debt will increase and physical and mental health will deteriorate. This cut is illogical, because at a time of fragile economic recovery, when high streets up and down the country are struggling and shops are closing, it makes no sense to be taking millions of pounds of expenditure out of every single constituency in the country. And this cut is unnecessary, because it is a political choice.
There are many ways in which the Government could lift people out of poverty. They could raise the minimum wage to the real living wage, make housing more affordable, make childcare more affordable and ban zero-hours contracts, but they have failed those on the lowest pay for more than a decade and now they are punishing the same low-paid workers. These are the same people who have been at the frontline of the coronavirus pandemic: social care workers, shop workers, childcare workers, delivery drivers, hospital porters, bus drivers and others. This is no way to treat those who have seen us through the greatest crisis since the second world war.
It does not take a degree in engineering to know that if the screws are too tight, the pressure will buckle and break even the strongest of materials. Make no mistake, this cut will break people who have already faced so much pressure from the cruel policies of this Tory Government bearing down on them. Government Members have a choice: they can live with this cruellest of cuts or they can join us in the Lobby and vote against it, because it is wrong and unacceptable.
Thank you, Madam Deputy Speaker.
“I will not have enough money to buy food or heat my home…I don’t know how I will eat...I am afforded no dignity...I am thrown on the scrap heap”—
those are the words of Joan, a woman in her 60s who wrote to me about the effects of the cut to universal credit. She said:
“I am ashamed to be in this situation”.
Another person who wrote to me was a single mum who told me about her beautiful daughter. They escaped domestic violence but now, even
“with the uplift... life is crushingly hard”,
she wrote. She continued:
“But losing 20 pounds a week will send us spiralling down.”
She said that she does not know
“how the Conservatives can do this to people”.
That is a tiny snapshot of the correspondence that I have received about the cut to universal credit and working tax credits. “How can they do this to people?” was the question. It is the single biggest overnight social security cut in the history of the welfare state, hitting more than 6 million families, including around 10,000 households in Coventry South. It is expected to push 700,000 more people, including 300,000 children, into poverty, with more than 500,000 pushed into extreme poverty.
Let us look at who is pushing this through. In the words of Amy, another person who wrote to me:
“I truly wish the Conservatives understood the impact of this cut. I don’t want to be on benefits”.
But what makes it “really humiliating”, she said, is
“that we have to prove we’re worth an extra 20 pounds a week to people who say they can’t survive on 150,000 pounds a year.”
That is the truth. The Conservative party is from a different world from those who are being hit by this cruel cut.
In one of my first speeches in Parliament, I called for an end to the inequality in opportunities that exists between working-class children and those born to wealth and sent to schools like Eton. For that simple demand, a Government Member accused me of “class warfare”. But if there is class warfare in Britain, this is it: led by an old Etonian, a Chancellor who is the richest member of the House, a Cabinet that is two thirds privately educated, and funded by the super-rich. The Conservative party is launching one of the biggest ever attacks on the living standards of the working class in this country, pushing millions more into desperation and misery. If Government Members have even a single scrap of decency, they will vote against this cut and instead, at the very least, extend the uplift to all legacy benefits.
Some 10,406 of my constituents in North Ayrshire and Arran, where one in three children lives in poverty, will be negatively impacted by the cut. The Government are willing to impose such a cruel cut when they know the severe consequences that it will have for those on whom it will fall.
That tells us the vision that the Tories have for society. It is a vision of a society in which the disabled should be punished for having an extra bedroom through the bedroom tax, which the Scottish Government fully mitigated; a society in which the local housing allowance is frozen, which is why the Scottish Government invested £80 million in discretionary housing payments; a society that is relaxed about child poverty, while the Scottish Government introduced the Scottish child payment for those on the lowest incomes.
But the Scottish Government, with their limited powers, cannot mitigate every single cruel cut imposed on Scotland by a Tory Government who were roundly rejected by the people of Scotland. That is why we need all the powers of an independent country: to protect our people from Tory Government cuts that we did not vote for and that we reject. When the time comes, soon, the people of Scotland will make their voices heard. They will make their own decision, take their future into their own hands and look after their own families—and they will vote for independence.
There are 14.5 million people living in poverty. The Government’s cut to universal credit at the end of this month will cast more than half a million people, including 200,000 children, into poverty. Let us digest those figures, the human cost that they entail, and how they shame one of the richest countries in the world and shame this Government.
I ask again the question that the multimillionaire Chancellor failed to answer last week:
“what assessment the Government have made of the impact of the cut, and how many…people in Liverpool, West Derby”—
where 20% of my constituents are on universal credit—
“will be forced into poverty”.—[Official Report, 6 September 2021; Vol. 700, c. 145.]
I also ask whether the Minister has considered whether the cut is a violation of international human rights obligations.
In Liverpool, Fans Supporting Foodbanks fed 4,000 people last month. Next month, it is looking to expand that to 8,000 people. That is where we are at the moment. That is where we are under this Government. I remind them that it is 2021, not 1821.
I ask the Minister to digest this list: Manchester, Greater Manchester Combined Authority, Liverpool, Liverpool city region, Rotherham, Totnes, Brighton and Hove, Haringey, St Helens, Newcastle, Portsmouth, Durham, Preston, Sheffield, Coventry and Birmingham. All those places have declared themselves Right to Food towns and cities in response to the humanitarian crisis of food poverty in our communities before the cut. I say to the Minister: end this immoral plan to cut universal credit, extend the uplift to legacy benefits, and, instead of attacking our communities, focus your energy on addressing the injustices of inadequate Government support, low pay and insecure work.
I got into politics in 2013 because I saw the devastating impact of the bedroom tax on my community, my friends and my neighbours. In 2013, we were angry and we were tired of three years of public sector cuts, but never for a minute did I think that I would be here, eight years and billions of pounds of cuts later, asking the Government not to implement the biggest welfare cuts in the history of the welfare state.
It is not only the universal credit cuts that will hit low-income families; those cuts are combined with the 3.2% rise in inflation, the national insurance rise, the end of the furlough scheme and the resumption of evictions. It is not the Tory party’s billionaire donors, who have increased their wealth during the pandemic by more than £100 billion, who are paying the price; it is key workers like my former colleagues in social care, shop workers and teaching assistants.
For many of the families I represent, £20 is the difference between eating and not eating. International law is very clear that cuts should not occur if human rights violations would occur, so is the Secretary of State still “entirely happy” with a cut that will plunge 730,000 children into poverty? What does she have to say to the 14,250 families in Nottingham East and the six million families across the country who will lose £1,000 per year? I do not want to hear about incentives to get people into work—the Conservative party knows full well that the cut hits people who are in work, because work does not pay. Cancel the cuts, introduce a real living wage and scrap the benefit cap.
It is abundantly clear that Conservative Members do not care about or understand the human cost of the decision that they are about to make. Far too many in this House live, and have always lived, lives that are miles away from the reality of life for constituents of mine—constituents like Sara, who is petrified of what impact losing the £20 uplift will have on her and her family. How will she pay the rent? How will she feed her family? How will she pay all her bills? She is afraid of losing what little she has, and of losing her dignity.
To a member of that exclusive club of millionaires, property owners and bankers to which so many Tories belong, this must seem like another country, but it is not. It is our country, the fifth richest nation in the world, and Sara, like other constituents, is one among millions throughout our country whose lives will be devastated by this cut. In my constituency, 43% of families with children are receiving universal credit or working tax credit, and our community will be particularly impacted by this cut.
However, the cut in universal credit is not just cruel; it is economically unsound. The Bevan Foundation, a Welsh think-tank, has calculated that it will take approximately £286 million out of the Welsh economy, potentially damaging the economic recovery. Talk of levelling up is cheap. This cut does nothing to aid any levelling-up process in my constituency. It actually does the opposite. It is clear to me that the Government are pursuing an economically illiterate policy. The cut will have catastrophic consequences for millions of people across the country, and will cause immeasurable hardship to millions.
I implore the UK Government to do the right thing and cancel the cut; to go further and extend the uplift to people on legacy benefits; and even to take more radical action such as trialling a universal basic income.
In my two minutes, I want to make a couple of key points.
The Conservatives’ planned £20 cut in universal credit is truly callous, but it is also economically illiterate. I am astounded that the Secretary of State for Work and Pensions should agree that she is “entirely happy” with this decision. Five million households, including 3.5 million children, will suffer a cut of £1,000 a year, and that personal impact will be exacerbated by the damage to our recovery, as local economies are stripped of vital money that would otherwise be spent with local businesses. In Luton, we face an estimated £16.5 million being stripped from our local economy. That will impact on local businesses trying to recover after the pandemic, as we have heard from other Members.
Luton has been particularly exposed to the economic fallout of the pandemic, because it has one of the highest proportions of workers in sectors that are vulnerable to lockdown and restrictions, notably aviation, retail, hospitality, food and accommodation. As a result, it has seen one of the biggest claimant count increases anywhere in the country. With furlough ending next month and no sector-specific financial support package for the aviation industry, I cannot but foresee more people having to rely on universal credit.
In Luton South, 16,000 households may have to choose between heating and eating. According to the Institute for Public Policy Research, one in six working households cannot make ends meet. I recently met representatives of the citizens advice bureau in Luton, who told me that one of the biggest concerns they have will be the increase in personal debt as a consequence of the cut in universal credit.
Fundamentally, the Government should listen to the families who need this money, listen to key workers who are struggling to make ends meet, listen to the charities and civil society organisations, and cancel the cut.
The points that I was going to make have already been made eloquently by other Members on these Benches, so I will make my remarks very brief.
I draw attention to the adverse effect on people who are disproportionately affected by this, particularly the WASPI women, who have already been robbed of their pensions. I also suggest that this is an opportune time for the Secretary of State to consider introducing a universal basic income.
The hon. Member for Don Valley (Nick Fletcher) asked how retaining the £20 could be paid for. I would say to him that we could get rid of Trident and HS2, neither of which Scotland wants or benefits from. It is disgusting that the six Scottish Conservative MPs are absent from the debate today. That shows a total disregard for the views of their constituents. The only way to ensure justice for the people of Scotland is for it to be independent and to have full control over the levers of the economy. This is the opportunity for Scotland to be independent.
Late last night on social media, I invited my constituents who will be affected by this cut to write in and explain how they would be affected by it. I tell you what, my phone was buzzing all last night and all this morning with messages from distraught constituents, and it is no wonder, because 14,000 families my constituency will be affected by the cut. Two thirds of people in my constituency who work and who have children will be affected by it.
I want to use the time I have today to read from just one of the messages I received, a message from young woman who wrote to me and said:
“Hello Richard, I’ve seen your tweet about you hopefully speaking to parliament about the cut and just thought I’d like to say how it’d affect me.
I was homeless from the ages 16-20 almost as I left an abusive home from my father and lost all my family and most friends I had. I finally got my own flat this year and the amount that I have been living on has the increased boost from coronavirus payment. After this has been cut I am not going to be able to afford food, phone bills, electricity/gas/wi-fi, council tax and the odd few bills like Netflix here and there. After all these payments have come out I will have about £5-£10 to live off for the month and that’s not even enough to travel for places I need to be or in case of emergencies. My mental health is at an awful place at the moment and I’m trying to attend counselling for it but my anxiety and depression are so bad that I can’t work right now.”
[Interruption.] I hear chuntering and I see grinning from people on the Government Benches.
I think it lets the Tories off the hook to say that they do not know the reality and that they do not live in the real world. In a way, they do. They know that this is the effect, but they are not bothered. They are taking the immoral choice, the shameful choice to stick the boot into the people we as a society should be supporting. That is a disgrace in one of the richest countries in the world. This is the choice that they have made. Don’t make this cut.
South Belfast is a relatively prosperous constituency. It is one of those that would be described as “leafy” in political commentary, along with the presumptions and generalisations that mask the economic diversity and substantial need that exist in the community I represent. It includes the highest levels of universal credit claimant rises in Northern Ireland throughout the pandemic, and those reduced earnings are in the context of higher utilities costs—gas prices have risen by a third in Northern Ireland, as was announced last week—and higher food costs, as well as an acute crisis in the availability of affordable rented accommodation.
Colleagues on this side of the House have rightly countered some of the myths that still persist about the reasons that people claim universal credit and, with a number of honourable exceptions, it has been helpful to hear some of the speeches from the Conservative Benches, as well as the interventions from former Ministers. However, some of the commentary that we have heard betrays a fundamental misunderstanding of the lives that the people in all our constituencies are living, of the work that they did during the pandemic and of the fact that it is not always as simple as just getting on your bike.
The SDLP has always been critical of the universal credit system. We refused to rubber-stamp it when others in the Assembly adopted it. We saw its inadequacies and the flaws, particularly in the context of insecure work and of Northern Ireland’s completely underfunded and inadequate childcare system. Yesterday, the Northern Irish Economy Minister came to my constituency and announced a high-street voucher spending scheme. Every adult in Northern Ireland will be given £100 in vouchers to prop up our beleaguered retail offerings. That is what one hand is giving while the other is removing £7 million in universal credit money from my constituency alone. We know that those funds are spent promptly and carefully on the local high street. This cut is not progressive, and this is not joined-up government. This is not doing the economy any favours, but it is not too late to change course.
This cut to universal credit is perhaps one of the most callous and cruel policies this Government have proposed, and we have a long list to choose from. After more than a decade of brutal austerity measures and chronic Tory mismanagement, absolute poverty and child poverty were soaring even before the devastating impact of the pandemic. In my Liverpool, Riverside constituency, where child poverty, relative poverty and absolute poverty already soar above the national average, it amounts to more than 3,200 families and nearly 6,000 children.
This draconian Tory Government are dangerously out of touch with the reality of millions. They have no comprehension of the reality of poverty, of missing meals and going cold. They claim that the need for fiscal responsibility overrides the need for just and fair policies, as if the two are mutually exclusive and as if economic prosperity cannot exist without inequality and poverty. The cut of £1,000 from the pockets of those most in need is the ugly face of that ideology of class warfare—let us call it what it is.
As a black, working-class woman born and raised in Liverpool, I know full well the impact of this class warfare. Thatcher’s policies of managed decline in the 1980s threaten to pale by comparison with the cruelty of this Tory Government. The bare, honest truth is that this cut is not fiscally competent. Hitting workers’ spending power with cuts to universal credit, a rise in national insurance contributions, a public sector pay freeze and a personal income tax freeze is not the economic competence that the Tories claim. It is the opposite.
Instead of taking money out of the pockets of those most in need, the Government must wake up to the reality facing millions of families who will be pushed into Dickensian levels of poverty and misery. I call on Members on both sides of the House to cancel this cut.
I thank so many of my hon. Friends for their powerful contributions to today’s important debate. Time is short, so I apologise that I am not able to mention them all personally. I also acknowledge the small number of Conservative Members who called on their own side to think again on this issue.
This debate has been rich in statistics, which reflects both the scale of the mistake the Government are on track to make, and the horror so many of us feel at the simple evidence of the numbers affected and that the impact on each family seems to bear such little weight on the Government’s decision making.
This debate has also been rich in powerful stories about what £20 each week, £100 each month, means to families right across our country. It means enough food to get through the week, it means being able to keep the house warm as the nights grow longer and it means growing children having clothes that fit them properly and warm clothes to see them through the winter.
My hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), in opening the debate, set out powerfully that the cut to universal credit hurts families in work, as well as those out of work. It is no solution to tell people who are about to be clobbered by this cut that they need to go and get a job when so many are already working all the hours God sends. Nor is it any solution for those who, by reason of disability, illness or caring responsibilities, simply cannot work.
This decision to cut the incomes of millions of families is a choice, but it is a choice that sadly fits with so many recent decisions made by the Chancellor and the Prime Minister. Last November, the Chancellor chose to put up council tax for the very families we are talking about today. He chose to freeze the pay of millions of frontline workers. In March, he chose to freeze income tax thresholds. Last week, he had a brand new tax on working people and their jobs. And today we are debating cutting universal credit.
Again and again, this Government look first to working people, rather than looking across the piece at our tax system. There was a stamp duty holiday for buy-to-let landlords and second home owners, but they have taken £1,000 a year out of the incomes of working people who are doing all that is asked of them.
The most recent figures show that GDP growth is stalling, and this morning’s inflation figures show us that the weekly shop is getting more expensive. Now is not the time to be sucking demand out of our economy. The Government are taking away £20 each week from budgets that are already stretched and from our high streets and local businesses that are getting back on their feet after a tough 18 months.
When I talk of universal credit as a meal on the table for families, heating for homes and coats for children, it is because I know the difference that the money makes. For me, this is more than political—it is personal. Growing up in the north-east in the 1980s, I was one of those children. Not long after starting school, as the winter drew in, my mam could not afford a new coat for me. She was a single parent, money was tight and we did not always have much. I was kept warm by the generosity of a neighbour, who himself did not have much, who saw me and put some money through our door in an envelope marked, “For Bridget’s coat”. I never forgot that kindness.
I thought, and hoped, that more than 30 years later we had moved on. I thought that as a society we would never again allow children to grow up in poverty, never again allow families like my own to be so dependent on random acts of kindness from others. As I grew up, I saw a Labour Government lifting hundreds of thousands of children out of poverty. I saw that poverty is not inevitable: it is about the choices politicians make. Poverty is not about coats or food in and of themselves—it is about the power to make choices for yourself and to have control over your own future. Today, we are seeing a Government about to plunge hundreds of thousands of children back into avoidable poverty.
Today’s debate is not about me. It is about the worried families in my community and across our country starting to think about the same horrible, painful decisions that my family faced all those years ago. At tables across this country, in every constituency, those discussions, those calculations, will be happening this evening and in the weeks to come. They are not decisions I would wish on anyone. They are not decisions Conservative Ministers should be forcing on anyone. That is why I urge all Members to make a different choice this afternoon. I urge Conservative Members to abandon their plans to take away £20 each week from struggling families, and to remember the common decency and compassion that should unite us all. I urge them to support our motion and join us in the Lobby this evening. It is time to cancel the cut.
Let me begin by thanking all hon. Members who have taken part in this important debate, and I will endeavour to respond to the points raised in the short time left available to me.
This debate has been wide ranging, and there is no question but that the last 18 months have brought unprecedented challenges. We have all had to change the way we have lived and worked, but in the face of adversity this Government provided an unprecedented response and delivered support to families across the country in response to this crisis.
We have heard how the £20 per week uplift to UC has made a difference to households facing economic shock and financial disruption as a result of the pandemic, and we have heard calls for the uplift to be made permanent and extended to those on legacy benefits. But I have to remind the House that the Chancellor has always been clear that the UC temporary uplift was a pandemic response, and he ensured that the support was in place well beyond the end of restrictions and reopening of our economy.
Not one Member of this House wants to see anyone in our constituencies in poverty. It is incumbent on all of us to work together to tackle the root causes and drivers of poverty. No one Member of this House has a monopoly on ideas and solutions to tackling poverty, and I have no doubt that everyone taking part in today’s debate wants to achieve the same outcome, but via differing means.
As we have heard in the debate, there have been significant positive developments in the public health situation since the extension to the uplift was announced: the vaccine roll-out is progressing well; restrictions have been eased; and our economy is opening up. As my right hon. Friend the Secretary of State said in her opening speech, job vacancies are currently above pre-pandemic rates. They are sitting just below a record high since the series began in 2018. There are more than 1 million active vacancies in our labour market and hundreds of thousands are moving into employment every week. That is a very promising sign that our economy is recovering, and quickly.
Universal credit provides a safety net, but it is not designed to trap people on welfare. Fundamentally, we recognise that work is the best route to prosperity and it is therefore right that the Government should now shift their focus to supporting people back into work and to progress in work. We have a comprehensive plan for jobs to help us achieve that objective.
Several Members called for the uplift to be made permanent. I want to tackle head-on the suggestion that this is a cut. I have to say that this is what turns people off politics and politicians. The removal of a clear, time-limited measure for a specific purpose is clearly not a cut and to describe it as such is disingenuous. There is no saving; in fact, it is quite the opposite: a further £6 billion would need to be raised through taxation just to maintain the uplift, let alone to extend it to legacy benefits. To my knowledge, not one Opposition party called for an uplift to the standard allowance of universal credit 18 months ago. In fact, when the Labour party was last in Government, it did not increase the rate of unemployment benefit above inflation because it was concerned about work incentives.
Several Members raised the annual cost of the uplift, which I can confirm would be £6 billion. The Chancellor has been absolutely clear that new day-to-day spending must be funded through savings or taxation, as part of a return to living within our means. This all has to be paid for. As hard as these decisions are—and they are hard—we have a duty to be fiscally responsible and to ensure that we have a welfare safety net that is there to support those who need it, that incentivises work, that is fair to taxpayers and that is sustainable for the future.
It was precisely because of our fiscal prudence since 2010 that this Government were in a position to put in place an unprecedented support package during the worst stages of the pandemic, to protect people, jobs and livelihoods. For context, it may assist the House to know that to raise £6 billion in taxation would require the equivalent of adding 1p on the basic rate of income tax in addition to a 3p increase in fuel duty. That would be a significant tax increase for hard-working families next year.
Several Members expressed concerns about poverty, which of course concerns me too. As I have said, universal credit provides a safety net, but it is not designed to trap people in welfare. All the evidence suggests that work, particularly full-time work, is the best route out of poverty and to prosperity. In 2019-20, there was only a 3% chance of children being in absolute poverty if both parents worked full time, compared with a 42% chance for two-parent families with only part-time work. Whether it is kickstart, restart, JETS or the 13,500 additional work coaches, this Government have a comprehensive plan for jobs to help us to achieve our objective.
In 2021-22, we will spend more than £111 billion on benefits for working-age people. On our support for those who are struggling, there will be £670 million in funding for local authorities, to help with council tax support; nearly £2 billion to increase the local housing allowance and maintain it in cash terms; £140 million in discretionary housing payments; and £220 million to extend the holiday activities and food programme. We have increased Healthy Start voucher payments from £3.10 to £4.25, and we have increased the national living wage by 2.2% to £8.91 an hour and extended it to all those aged 23 or over.
In conclusion, as we have demonstrated during the pandemic, the Government are committed to supporting the poorest, the lowest-paid and the most vulnerable in our society and to ensuring that people have the support that they need. Now is the time to be positive and ambitious and to look to the future. The expected rise in unemployment during 2021 has not materialised. The unemployment rate is now around half a percentage point lower than it was at the start of 2021. Vacancies are up to record numbers and now stand at more than 1 million, which is more than double the number this time last year. The number of furloughed workers is falling each week and the number of payrolled workers is up by nearly 1 million since the start of the year. Everything is moving in the right the direction, so our focus is rightly on continuing the implementation of our multibillion-pound plan for jobs. After all, a working Britain is a Britain that works. That is a pillar of our agenda as we build back better and fairer for our whole United Kingdom.
That this House calls on the Government to cancel its planned cut to Universal Credit and Working Tax Credit which from the end of September 2021 will reduce support for many hard-working families by £1,040 a year.
On a point of order, Madam Deputy Speaker. Is it not a disgrace that the Government have developed this habit of abstaining completely from Opposition day votes because they do not have the guts to oppose in the Lobby the things that we suggest, and they are frightened of the effect that it will have in their constituencies? It was once the case that when Governments lost Opposition day votes they put into effect the will of the House. This Government are showing such contempt for the House that they cannot even be bothered to take part in these votes. Is that not a disgrace? Is there anything, as a House, that we can do to prevent this despicable behaviour?
Further to that point of order, Madam Deputy Speaker. The House has expressed itself very clearly in saying that there are concerns about the £20 of universal credit being taken away from the people who need it most. That being the case, how can we ensure, legislatively, that we turn that into a victory for the people we represent in this House and for those who want that universal credit money to continue for at least a period of time?
I thank the hon. Lady and the hon. Gentleman for their points of order. How the Government choose to vote is not a point of order for the Chair, but it might be helpful if I remind the House that on 26 October 2017 the former Leader of the House, the right hon. Member for South Northamptonshire (Dame Andrea Leadsom), set out the following:
“Where a motion tabled by an Opposition party has been approved by the House, the relevant Minister will respond to the resolution of the House by making a statement no more than 12 weeks after the debate.”
I am sure that those on the Treasury Bench will have heard that. To address the hon. Gentleman’s point directly, the resolution on an Opposition motion is not a binding resolution, hence my drawing attention to the fact that we assume that a Minister will come to the House within 12 weeks to respond.
On a point of order, Madam Deputy Speaker. You will be aware that if the Government do not take action on the universal credit cut, in 12 weeks that £20 a week will be gone from the constituents who we all represent. On a broader point of consistency, the Government have clearly abstained on the vote on the first motion of this Opposition day. The subsequent motion is essentially a motion about House business and would instruct Mr Speaker to set up a Committee. How can the Government claim to have consistency when they abstain in the vote on the first motion and will almost certainly vote against the second motion this evening?
I am afraid I am not really answerable for whether there is consistency in the choices that are made. Every Member has the right to decide whether they want to vote or not vote. I assume that these issues could well be addressed later in the debate, to which we now come.