In-work Poverty

[Christina Rees in the Chair]

I beg to move,

That this House has considered in-work poverty.

It is an honour to serve under your chairmanship, Ms Rees. Before I start, I want to pass on our best wishes, from all sides of the House, to the Under-Secretary of State for Work and Pensions, the hon. Member for Mid Sussex (Mims Davies), who I am sorry to hear has covid. I am sure that her colleague, the Under-Secretary of State for Work and Pensions, the hon. Member for Macclesfield (David Rutley), will do an admirable job in her place.

Work should always be a pathway and route out of poverty. The fact that the phrase “in-work poverty” even exists is a damning indictment of successive Conservative Government policies over the past 12 years. The Government are clearly making life harder for working people, as I will illustrate with a number of examples. I am conscious that a large number of Members want to participate in this important debate, so I will truncate my remarks, but I want to illustrate my argument with some examples from a number of sectors.

Clearly, one of the issues is the increase in taxes and national insurance, which is in direct contravention of a commitment that the Conservatives made in their last general election manifesto. We are also having to deal with the problem of the huge increases in energy prices that the Government, via Ofgem, have allowed to take place. Members may recall that I had a question for the Prime Minister last Wednesday in order to contrast the position of the French Government, who have capped energy price rises at 4%, with that of our Government, who have capped energy price rises at an incredible 54%. That has had a huge impact on people who are in work.

Fuel poverty, food poverty, energy poverty, housing poverty and child poverty are all measures of economic failure, and they are all on the increase. According to the Joseph Rowntree Foundation, one in eight workers are struggling to make ends meet. If work guaranteed a decent standard of living, the UK would be going through a golden age of prosperity. Instead, the Conservative party has delivered successive year-on-year policies of austerity over a decade. The social security safety net has given way, after a decade of wear and tear.

Without the most basic protection, a decade of pay cuts and wage stagnation has left working families ill prepared. Many have no savings at all, and people certainly have far less resilience to cope with the current cost of living crisis. In the workplace, we have seen employment rights deliberately weakened, a dramatic increase in the number of zero-hours contracts, and an expansion of the gig economy, with a growing proportion of working people in insecure employment.

I also want to mention the appalling employment practices. Poor employment practices, such as fire and rehire, are rife, even with very profitable and long-established companies, some of which are household names. Despite recent and repeated assurances from Ministers at the Dispatch Box—often condemning the practice—they have done nothing to outlaw the practice of fire and rehire by rogue employers. The Government have disregarded the interests of working people and dismissed the private Member’s Bill brought forward by my hon. Friend the Member for Brent North (Barry Gardiner).

The key workers we all clapped for and honoured during lockdown are bearing the brunt of our low-wage, poverty-pay economy. Figures produced by the TUC reveal that 43% of north-east key workers—over 173,000 people —earn below £10 an hour. Personally, I do not think that £15 an hour is an unreasonable ask in this day and age.

I thank my honourable comrade for giving way. Is he as surprised as I am at a recent article, published by The Herald newspaper and The Ferret website, showing that 20% of jobs advertised on the Department for Work and Pensions website paid under the national minimum wage rate of £9.50? The Department really needs to launch an inquiry into why that is the case.

Absolutely. It should concern us all when the DWP is advertising jobs that fall below the minimum standard and even the limited protections afforded to working people.

We know that even a modest increase in the minimum wage to £10 an hour would transform the lives of key workers, including one in three care workers—so many of us applaud care workers for their contribution, particularly during the pandemic—and 173,000 childcare workers. It would raise the incomes of over half a million people.

Workers across the country are struggling to feed their families and heat their homes. I will give some examples, including one I received from the National Union of Rail, Maritime and Transport Workers. Like many of us, I have met the cleaners employed by the Churchill Group who are fighting for a real living wage of £15 an hour. I will also highlight the fact that the GMB trade union is campaigning against real-terms pay cuts for nearly 150,000 ASDA staff, and the ongoing University and College Union strike in the university sector. The pattern is the same: terms, conditions, wages and pension rights are being eroded; workers who try to negotiate are blocked, ignored and blamed; while well-paid directors shrug their shoulders with uninterest, often while picking up huge bonuses.

The workers who kept our supermarket shelves stacked during the pandemic are now struggling to feed their own families. I was shown a survey by the Bakers, Food and Allied Workers’ Union, which was very illuminating; it was conducted by the union of its members, who are in the food sector. It found that between February and March 2021, 40% of those surveyed had eaten less than they should have eaten because they did not have sufficient cash; 35% had eaten less than they should have to ensure that other members of their household got a meal; and 21% relied on goods and contributions from family and friends to make ends meet. These are people who are in work—shift workers who supplied the country with bread during the pandemic.

Order. The debate is well subscribed, so I am putting in place a formal time limit of four minutes. I call Peter Gibson.

It is a pleasure to serve under your chairmanship, Ms Rees. I congratulate my County Durham colleague, the hon. Member for Easington (Grahame Morris), on securing the debate. He called for a 58% increase in the minimum wage, which would have a massive inflationary impact. He cannot complain about inflation and the cost of living crisis that we face while advocating policies that would create further problems. If levelling up is to succeed, we must tackle poverty. I want to make it clear that I believe that one person or family in poverty is one too many.

As we all know, employment is the best route out of poverty. Evidence shows that full-time work substantially reduces the chances of living in poverty, and I am proud that the Government have taken an approach to tackling poverty that has employment at its heart. We have seen the Government accept the four recommendations of the Low Pay Commission, which will see the living wage increase to £9.50 an hour—an increase of 6.6%. We have seen the Government extend the national living wage to 23 and 24-year-olds, who will also benefit from the increase to £9.50. Improvements have been made for those on universal credit and in work, with an increase in the work allowance and a reduction in the taper rate, making work pay. Across the country, we have seen massive improvements in our pension savings for working people, with auto-enrolment securing a pension income for millions. I am hopeful that this can be extended to younger people and those working part time, to help ensure that they save for their futures too.

I appreciate that some people do not have the skills to get the job that they want, including those who left school at an early stage and those who have caring responsibilities. That is why the Government’s lifetime skills guarantee is designed to transform the adult education system, helping people of all ages to develop the skills that they need to get better jobs and supporting businesses to find or develop talents to fill the skills gap. Last week, I visited the marvellous Darlington College and saw with my own eyes the incredible learning and training opportunities on offer, from plumbing, plastering and public service to catering, car repairs and childcare. As T-levels will be introduced later this year, the college also offers courses in robotics. These are incredible opportunities to learn and improve skills for the economy of the future.

The cost of living crisis is biting deep into the lives of my constituents in North Ayrshire and Arran. In-work poverty ought to be a contradiction in terms, but it is at an all-time high. Two thirds of working-age adults in poverty live in households where an adult is working, and 75% of children in poverty live in a home where at least one person is working, which shows that work offers no guaranteed route out of poverty. In-work benefits, such as universal credit, are simply not enough to lift people out of poverty, and cutting the universal credit uplift and the working tax credit of £20 a week was not just folly on the part of the Government; it was also cruel in the extreme, because it was done in the full knowledge of the hardship it would cause.

Despite the doubling of the Scottish child payment, the universal credit uplift cut has caused untold hardship in our communities. What can the Government do? They need to raise the statutory minimum wage in line with the real living wage, and they need to remove the age discrimination that it inherently contains. They need to understand that increasing the national minimum wage to £9.50 per hour next month is simply not enough to compensate the people who are suffering because of soaring costs in every direction, and it does not compensate them for the £20 cut in universal credit that they have already suffered.

The Government could ditch the national insurance tax rise, which is set to kick in next month and will disproportionately hit those in the lowest-paid jobs. They could increase statutory sick pay—we have one of the lowest sick pay rates in the OECD. Even so, one in five workers are simply not eligible for it, which, again, disproportionately impacts on women. They could support my Bereavement (Leave and Pay) Bill, because we know that beyond the emotional impact of bereavement, there are significant financial costs as well, without the bereaved having to worry about lost earnings. They could reverse the £20 per week universal credit cut immediately and abolish the electricity standing charge, which amounts to about a quarter of consumer energy bills for the less well off.

It is a pleasure to serve under your chairmanship, Ms Rees. I congratulate the hon. Member for Easington (Grahame Morris) on securing this debate. Although we might disagree on the ways of tackling poverty, I think we all agree on the need to do so.

I want to start by defining what I mean by in-work poverty. It is important that when we talk about poverty we use the correct definitions. The Work and Pensions Committee’s report on children in poverty goes into different definitions and how they are used and misused. I will use the standard definition of relative poverty. Many have focused on financial poverty, but I do not think that is the best definition. I prefer multi-modal models because I think poverty is about more than just money. It is also about educational and societal resources, but this debate has very much veered into the financial side.

On the financial side we look at inputs and outputs. Inputs are about wages, benefits and benefits top-ups, and outputs are about living costs. I want to focus on the outputs and what I call the two big beasts, which I have been campaigning on for some time—affordable housing and childcare. For affordable housing we need to sort out affordable rents. It horrifies me that in my constituency the No. 1 cause of someone being at risk of homelessness remains affordable rents, which we need to get sorted and fixed.

Childcare is also a particular challenge in terms of a big beast. It costs a lot. It is difficult for people to administer, particularly the requirement to pay up-front costs and then claim retrospectively when one is on benefits, as opposed to directly invoicing the Department for Work and Pensions. The 85% cap for people on benefits is not enough to cover childcare costs for many people. For those in receipt of 15 to 30 hours’ free childcare, certainly if they live in my constituency, lots of childcare providers require top-ups, so the idea that it is 15 to 30 hours of free childcare is illusory. Many people need financial top-ups over and above that provision. The provision is very generous, but it could be more generous still.

It is a great pleasure to serve under your chairship, Ms Rees. I congratulate my hon. Friend the Member for Easington (Grahame Morris) on securing this important debate. This debate takes place in the context of a sustained attack on the living standards of ordinary people in this country. Energy bills are rocketing. There are tax rises and real-terms pay cuts for millions of people, as well as cuts to universal credit, benefits and pensions. That does not happen in a vacuum; it comes after a decade of austerity, cuts to public services and the tightest squeeze on wages in 200 years. Experts warn that this could be the biggest drop in living standards in many decades.

What does that mean in reality? The daily reality of this crisis for families in my constituency of Leeds East and throughout the country is grim. How, in the fifth-biggest economy on Earth, can we have families who cannot turn the heating on? How, in the fifth-biggest economy on Earth, can we have a situation where parents are missing meals to make sure that their children can eat? How, in the fifth-biggest economy on Earth, do we have more food banks than branches of McDonald’s? I recently met staff at the Chapeltown Citizens Advice in Leeds; their data shows that already, more than one in seven people in my constituency cannot pay their energy bills without cutting back on essential spending.

At the same time, the richest are getting richer. While millions suffer, the millionaires are doing very well. British billionaires have increased their wealth by £290 million per day. The Government have been slashing the taxes of bankers and the gas and oil giants that make £900 profit every single second. Let us be clear: the right to be warm is more important than the right to make super-profits. It is a rigged economic system, which is failing ordinary people. It is a crisis made in Downing Street—let us not be scared to say that.

It is a pleasure to serve under your chairmanship this afternoon, Ms Rees. I congratulate my hon. Friend the Member for Easington (Grahame Morris) on securing this incredibly important debate.

Poverty is a scourge that devastates lives. In today’s debate we are focusing on in-work poverty, but the Government should address poverty however it arises. A report by the Institute for Public Policy Research in May 2021 highlighted that the UK’s poverty rate among working households was at a record high this century. The report also found that in 2019-20 the majority of those living in poverty were in households that had some form of paid work.

That is also reflected in the Government’s statistics, which show that of all the working-age adults in poverty, both in the UK and in the north-west, 65% are in working families. In some areas, the figure is even higher. For the east of England, that is 70%, and for the south-west, 72%. That is truly shocking, and completely dispels the Conservative myth that work is the best route out of poverty. I am so disappointed that we have already heard that myth chanted today.

If work is not the route out of poverty, what is?