The House of Lords: The more one hears of the debates there, the more one is impressed by them.
One side of them, at least.
For example the debate on the Benefits Uprating Bill, that took place on Tuesday, including a fascinating interlude by Lord Bach, in which he made explicit the meaning of the government’s planned withdrawal of Legal Aid for benefit claimants.
The government claims the intention is to save money, but Lord Bach (pictured) made it perfectly clear that there will be no saving at all, in the end.
One is left with the only possible alternative – that this vindictive government of millionaires intends to make it impossible for the poorest and most vulnerable in society to seek legal redress against cruel and unwarranted decisions that will withdraw from them the money they use to keep themselves a hairs-breadth away from destitution.
It is a decision to attack the poor for the fun of it.
Don’t take it from me; here’s how Lord Bach put it:
“What is so often left out of the arguments about welfare reform… is what potential real remedy the citizen will be left with if the department’s [of Work and Pensions] decision is wrong. Surely the fact that it is wrong in many cases is not in question. We all know that, with the best will in the world, decisions made by the department are often wrong and very much to the disadvantage of those who want to claim them.
“For a long time, this has not been a pressing problem. For those requiring legal advice on their benefit entitlements, Legal Aid has been available – if, of course, these people came within the criteria for Legal Aid, and many did.
“For a small amount of Legal Aid, quality advice has been available, having the effect of both stopping – this is important in cost terms – hopeless claims and establishing good claims where appropriate. It is a system that worked. Putting it at its highest, it has allowed access to justice for all.
“At a slightly lower level, it has meant that tribunals have not been faced with an impossibly large number of cases, many of which should never have been brought in the first place.
“It has cost a fraction of the total Legal Aid budget and is paid to lawyers who are not by any standards well paid. Yet from April 1, as a deliberate act of government policy, this legal help will no longer be available for anyone in cases relating to welfare benefit entitlements.
“Thus, people will not be able to get the advice to which they are entitled. Their access to justice will be gone. The department will get away with wrong decisions and tribunals will be overburdened with what I can only describe as rubbish cases – all to save £25 million per year on welfare benefit advice.
“That is one-tenth – I repeat, one-tenth – of the amount set aside by the Department for Communities and Local Government so that there can be weekly rather than fortnightly collections of rubbish. Is this really a proper sense of priorities for a time of austerity?
“Further, everyone who knows anything about this agrees that this is not likely to be a saving at all in the end.
“The state… will eventually have to pick up the pieces when things get much worse than they need to. How can the Minister or any government justify this either in terms of common decency, which should appeal to this House and normally does, or even under the rule of law?”
We all thought the Tories would be left heartbroken after the Hunting Act took away their favourite extracurricular pastime.
It seems they have found another blood sport to replace it.
The Nasty Parties’ (I include the Liberal Democrats now – let them all be tarred with the same brush) have voted to squeeze benefit increases to just one per cent for the next three years, after the third reading of the Benefits Uprating Bill in the House of Commons.
That Bill will now go to the House of Lords, where I sincerely hope it will receive a more intelligent examination than many Conservatives and Liberal Democrats gave it in the other place. To help them with that work, I wanted to highlight some of the issues raised by opponents to the Bill, during yesterday’s debate.
Firstly, the government is punishing people who are already hard-up for the failure of its own economic policy. As Stephen Timms said, we were promised that the policy would lead to steady growth and falling unemployment, but we got a double-dip recession, perhaps set to become triple-dip, depending on figures due this week. Unemployment is officially forecast to go up next year, so spending on unemployment benefits will go up, and borrowing will go up too.
The government’s response is to force down the incomes of those who already receive the least in order to cover the cost of its mistakes; the saving made by the Bill’s measures will be about the same as the increase in social security spending.
In April, the government will give a tax cut to everybody earning more than £150,000 per year, and for 8,000 people who earn over £1 million a year, that means a cut of around £2,000 a week. At the same time, someone receiving the adult rate of Jobseekers’ Allowance will get an extra 71p a week.
The change in the personal tax allowance will not help people in work on low incomes. Citizens Advice has pointed out that “any rise in net earnings leads to a reduction in housing benefit and council tax benefit.” In fact the improvement for people in low-income work was recorded by Helen Goodman: 13 pence per week.
Meanwhile, the average price of weekly grocery shopping has risen by 17 per cent and the energy companies have hiked up their prices by around 11 per cent.
The government lied when it said people in the support group of Employment and Support Allowance are protected – they are not. A lone parent with three children who is in the support group will lose £600 in 2015-16 because of the exponential way in which the Bill will grind down the incomes of people who are already hard-up. [CAB]
In fact the impact assessment tells us disabled households are more likely than others to be hit by the changes in the Bill.
Child poverty is set to skyrocket, thanks to the measures of the Nasty Government. The Institute for Fiscal Studies tells us that, taking account of everything that the Government announced before the autumn statement, child poverty was already set to increase by 400,000 by 2015 and 800,000 by 2020.
Although it was not mentioned in the autumn statement or the impact statement, and a question to the Minister has gone unanswered, the government has let it slip – in a statement by a different minister – that the three years of one-per-cent uprating will increase child poverty by 200,000 – on top of the increase that is already due.
That means that we are on track for one million more children below the poverty line by 2020 – reversing all the progress made during the 15 years since Labour came to power in 1997.
And that is only the figure the government has been prepared to acknowledge in relation to relative income. It has said nothing about the impact on absolute poverty, material deprivation or persistent poverty — measures to which it committed itself in the Child Poverty Act 2010.
The Children’s Society estimates that the following professions are also affected: 300,000 nurses and midwives in the NHS; 150,000 staff in primary and nursery schools; 1.14 million admin workers, secretaries and secretarial assistants; 44,000 electricians and electrical fitters; 510,000 sales assistants and cashiers; and 42,000 armed forces personnel.
“We certainly want it to be more worthwhile for people to be in work, but forcing down the incomes of those who are out of work is not the way to do it,” said Mr Timms. I have been saying that, here, for many months, and it did my heart good to see that it had been said in the House of Commons.
He said uprating should indeed be in line with inflation, as it always was in the past.
He continued: “The Bill was designed by the Chancellor to promote his party’s narrow interest.” Yes – the Conservatives are a minority-interest party. This Bill, and the tax cut for those earning more than £150,000 per year, prove it. They support the super-rich; you and I don’t get a look-in.
And he pointed out that the government did not need an Act of Parliament to restrict benefits upratings. “The Chancellor thought he could boost his party’s standing if he introduced a Bill, so we have one,” he said. Absolutely correct. The plan was to make the Labour Party, in opposing the plan, look like the party of scroungers and slobs. Instead, the Conservatives have confirmed themselves as the ‘Nasty Party’, oppressors of those who most need government help.
“Ministers still say that they are committed to eradicating child poverty,” said Mr Timms. “It says so in the coalition agreement. That commitment is clearly now fictitious. Ministers should stop pretending. They have given up on reducing child poverty. Now they are implementing policies that will force child poverty up.”
Let me draw your attention to the words of Toby Perkins, who tried to put the debate into proper context: “There is a particular irony in the Chancellor, who was a millionaire the day he was born, railing against the extravagance of those on £71 a week.”
I think I can sum up the government’s argument with the words of Charlie Elphicke, who said around five million people in the UK could work, but don’t. He said they need more of an incentive, including an economic incentive, and quoted the Chancellor, Gideon – sorry, George – Osborne: “Over the last five years, those on out-of-work benefits have seen their incomes rise twice as fast as those in work. With pay restraint in businesses and Government, average earnings have risen by about 10 per cent since 2007. Out-of-work benefits have gone up by about 20 per cent. That is not fair to working people who pay the taxes that fund them.”
In other words, he wants to shrink the state (the government’s own actions have created a hole in its finances; it wants to cut public spending to fill that hole) and he can’t do his maths. He compounded his foolishness with a well-repeated lie: “Money is tight in this country today. The reason for that is that [Labour] drove our economy off a cliff, overspending for years and displaying fiscal incontinence that was unparalleled in this country in the last century.”
That is absolutely untrue. Labour ran a lower deficit than the Conservatives throughout its years in power. The increases in the deficit and the national debt were caused by the banking crisis. Conservatives and Liberal Democrats are on record as having supported what the then-Labour government did to solve the mess that was created by high-earning bankers (about whom the current government has done nothing worth discussing). They would have done the same thing and created the same debt.
Fortunately, Ian Mearns was on hand to put Mr Elphicke right: “The hon. Member… forgot to mention that, while those on benefits have had their benefits uprated at twice the rate of those in work in percentage terms over the past five years, the actual increase in financial terms has been on average about £49 for those in work and about £12 for those on benefits.
“Percentages are meaningless; 50 per cent or 100 per cent of very little is still very little. Making comparisons in the way that he did demeans the debate.”
He added: “I think it is the ultimate insult to ordinary people’s intelligence to say that in order to incentivise those at the top end of the economy we have to pay them more, while incentivising people at the bottom end by paying them less. ‘We are all in this together’ — I don’t think.”
Lords, please take note. If any of you uses the argument about percentage increases, I sincerely hope to see others ask that person whether they will be supporting the government on the basis of something that has been proven – and is now known to the public at large – to be utter, meaningless nonsense.
“If you’re a student, and you have to pay a fee to go to university… You end up with a debt of 12,500 quid, you marry another student – £12,500, well, 25,000 quid; you then try to get a house because you want to start a family – that’s 40,000 – you start life with a debt of £60,000! I tell you, it would be great, convenient, to a future employer because someone with a debt of 60,000 quid is not going to cause any trouble; otherwise they might lose their job and so on.” Tony Benn, speaking circa 2002.
One has to admire Tony Benn for his powers of prophecy!
Clearly, he was able to look nearly a decade into the future to foretell the coming of a government for whom the imposition of a £9,000-per-year tax on learning – by universities themselves, not the government itself – was a desirable outcome. Right?
Wrong. He was talking about the introduction of those fees by Labour in 1998. The Labour government increased the amount it was possible to charge in tuition top-up fees in 2004, a couple of years after Mr Benn uttered the words I quote above.
Labour was on the slippery slope, even then. The party of the people had lost sight of the effects such policies would have on them. Why? Because the lure of business-oriented advisors was so strong. “Here’s where the money is,” it seems they were saying. “Come with us.”
What a shame they were talking about money for them, rather than the UK as a whole. Mr Benn’s prediction about student debt was – if I may be so tasteless as to say so – bang on the money and now we’ve got a lot of people labouring (sorry!) under serious debt.
It was a mistake.
Look at the credit boom in the early 2000s, when banks and other organisations were throwing money at people willy-nilly (or so it seems today). We know from analyses made after the 2008 crash that little attempt was made to evaluate borrowers’ creditworthiness, and hindsight suggests we should not be surprised that so many of them proved to be completely unable to clear those debts, with many borrowing even more in order to meet the interest repayments they had incurred. Eventually, people started to default, and in huge numbers. What did the lenders expect?
That was a mistake – not just by our (and others’) government, but by the major lending institutions of the UK and the western world.
Look at Workfare. Labour wanted to bring it in, despite the results of repeated studies before the 2010 election that showed workfare programmes did not increase the likelihood of finding paid employment and could instead reduce that prospect by limiting the time available for job searches and by failing to provide the skills and experience valued by employers.
Then the 2010 election happened and Labour got the boot. So instead, the Conservative-led Coalition government brought it in. Interesting, that.It’s almost as if the same people had been advising both parties on employment policy, don’t you think?
We all know the effect of Workfare. By going into organisations – including profit-making companies that are perfectly capable of employing staff in their own right – and providing free labour for them, the government not only stops those firms from actually taking on new staff – it depresses wages by ensuring current staff cannot ask for a pay rise; bosses can now simply give them their marching orders and ask for more support from Workfare.
In a nation that desperately needs to increase its tax income, to pay off a rocketing national debt, that has to be a mistake, right?
We can see that it is planned because the effect of the Coalition’s Benefits Uprating Bill will be the same – by ensuring the unemployed must chase every job available – no matter how low-paid – because benefit no longer covers their costs and they run the risk of losing everything they own, the government is also ensuring that people who are already in low-paid jobs live in fear that their contracts will be dropped in favour of employing people who will take less.
So: not a mistake, after all.
Or is it?
The UK economy has taken three major hits over the last week or so. First Honda cut 800 jobs at its factory in Swindon on January 11, blaming a sales slump across Europe. That’s an effect of austerity – people have less money to spend on cars which, apart from houses, are the most expensive investments ordinary working citizens can make.
Then camera retailer Jessops closed its 187 stores with the loss of 1,370 jobs on the same day – apparently blaming the rise in camera phones. That’s another effect of austerity – people won’t buy specialist photographic equipment they don’t think they can afford when they’ve got cameras as part of their mobile phones; lack of disposable income means they must try to make their purchases wisely.
Now HMV has run into trouble, seeking insolvency protection and putting 4,500 jobs at risk. The 91-year-old record store chain couldn’t compete with online firms such as Amazon, it seems. And no wonder – Amazon is cheaper, people can do their shopping at home and, of course, Amazon don’t pay their taxes.
I reckon that’s around 6,670 people whose jobs are either lost or in serious jeopardy, because of austerity policies fuelled by managers’ greed. It is heads of industry who advise the government, and their advice (as I’ve previously stated) has always been to ensure that workers’ pay is low, so their own salary increases can be high – 800 per cent more over the past 30 years. I keep harping on about that because, as figures go, it’s such a whopper that it needs special attention.
But the policy has backfired because these people have failed to account for the fact that it is the working and unemployed poor who spend most of their money on the products their companies sell. With no money to spare, the companies lose revenue and have to make cutbacks. Now even fewer people are economically active and there is even less money to spare.
More companies hit the wall. Without sincere and concentrated effort to halt the process, a cascade effect could kick in, leading to – as I mentioned only a few days ago – economic ruin.
I take no pleasure at all from seeing my own prediction coming to fruition so quickly.
So, returning to Mr Benn’s comments at the top of this piece, what will Labour – Her Majesty’s Loyal Opposition – do about it?
And the answer is: More of the same.
What are they playing at?
Labour’s ‘Job Guarantee’ will, according to Boycott Workfare, “give billions of taxpayers’ money to subsidise big private businesses – probably the likes of failing and government contract-reliant A4E, and workfare-users ASDA – helping them to drive up their profit margins. It guarantees to further undermine real job vacancies as companies replace job roles with subsidised compulsory short-term placements.
“Labour, like the Coalition government, also now guarantee to undermine the idea of a living wage, which just two months ago Ed Milliband appeared to champion. After all if a company can get staff forced to work for it, both provided by and subsidised by the state at minimum wage, why pay the living wage?”
In spite of all the evidence, it seems Labour wants to make matters worse.
This is no good at all! When it comes to 2015, at this rate, voters won’t see any difference at all between Labour and the Tories.
It’s time for a complete change of plan. Labour needs to jettison all the nonsense it picked up during the New Labour years – along with any Shadow ministers who are still spouting it – and go back to its roots.
Work out a policy that actually supports industry, employment and prosperity, rather than the fatcats who are clearly corrupting all our politicians.
I can’t say for sure that you saw it here first, but I’ll state it plainly: The government’s below-inflation benefits increase, coupled with the changes it is already bringing in, will break Britain’s economy altogether.
Companies up and down the UK will go out of business and nobody will take over from them. The cuts mean £40 billion will be removed from the economy this year – and, with no coherent plan to invest in jobs and growth, this means trouble for everyone. Even the fat cats who think they’re insulated.
I have covered the evidence in my previous few articles. The fact is that the working poor and those on benefits underpin the British economy. Without them, it cannot function. They spend most, if not all, of the money they receive, rather than seeding it away in banks or foreign tax havens, like the big businesspeople the government of millionaires has done so little to curb.
But benefits and wages are being cut, in real terms. Many people will find it hard to hold onto their homes because of the bedroom tax, cuts in housing benefit to meet the demands of the benefits cap, and increases in tax bills because Council Tax Benefit is to stop. Those buildings will remain empty because people will not be able to afford the cost of moving in. We will have legions of homeless people shuffling through one ghost town after another.
Malnourishment will increase. The average cost of groceries has risen by 17 per cent in the last two and a half years. No wonder our children have rickets.
So sickness and disability will increase – but those claiming disability benefits are among the most persecuted in this country, with the last recorded figure showing an average of 73 deaths every week in this part of society.
All because greedy private employers don’t want to pay their workforce enough money to cover their outgoings.
Sickening, isn’t it? People whose incomes have risen by more than 800 per cent over the past 30 years begrudge the 27 per cent rise their workers have had in the same time, and want to push those wages down still further.
That is why the Benefits Uprating Bill is going through Parliament. That is why Iain Duncan Smith is pushing through his punitive changes to the social security system – to create insecurity. Because people who fear that their jobs might be taken by somebody else are less likely to ask for a raise.
That is why our nearly-1,000-year-old civilisation is about to land on its arse.
If you think I’m overstating matters, think again. The UK economy contracted by 0.3 per cent in the last three months of 2012, according to the National Institute of Economic and Social Research (NIESR). And the figures relating to the government’s changes were reeled out during the debate on the Benefits Uprating Bill by the following MPs.
“We have to ask ourselves whether we want to continue to support a situation in which private employers in particular do not want to pay a living wage to the staff that they employ in order to make profits,” said Ian Mearns.
“Since this Government took office, the cost of the average weekly shopping basket has risen by 17 per cent.” (Michael McCann)
“People on low incomes tend to spend locally and to spend all their money. The Welsh economy is overwhelmingly made up of small businesses… Working tax credit reductions will suck demand out of local economies and make matters even more difficult for small businesses struggling to survive in the recession.” (Hywel Williams)
“It is estimated—the IMF is the source — that these benefit cuts will contribute to a £40 billion reduction in the country’s output when we desperately need the opposite to happen.” (Steve McCabe)
“The Treasury confirmed that the working tax credit lost in 2013-14 by people who are working full time on the minimum wage, due to the Government’s freezes and the increase in the earnings taper, will be £475 for a single person with no children and £660 for a couple with one child. Contrary to the assertions made in Parliament, the amount of working tax credit lost by families with one earner on the minimum wage will be greater than their saving of £420 in 2013-14 from the increase in the personal tax allowance.” (Yvonne Fovargue)
“The more people there are taking cuts to their tax credits and take-home pay, the fewer people there are spending in local economies. In an area such as mine, where there is a high proportion of small businesses that employ many people from the local area, that is devastating.” (Lisa Nandy)
“The policy is not only unfair but economically inept. As many have pointed out, people on the lowest incomes spend their money in local economies, and the last thing that we need is a further contraction in demand in local economies.” (Nic Dakin)
And Julie Hilling said: “The IMF has already warned the Government that their annual cut of £24 billion to benefits and tax credits will reduce economic output by up to £40 billion. Not only are they heartless; they are incompetent too.
“The way to get down the benefits bill is to get people into decently-paid work. By already having a double-dip recession and heading for a triple dip, the Government have demonstrated that we cannot cut our way out of a recession — we have to grow our way out.
“Punishing the poor and bringing them to desperation will not grow the economy; it will simply make it worse.”
It’s absolutely astonishing, the amount of willingness people have to be tricked by Tory doubletalk.
For example: “We love the National Health Service,” said David Cameron. Then Andrew Lansley turned it into something that was neither national nor healthy.
Now Iain Duncan Smith is busy turning our social security system into something that is extremely insecure and downright antisocial!
In the name of fairness.
He and his cronies keep repeating their mantra that benefits have increased by almost twice as much as average wages, even though it has already been proven to be total nonsense.
Well, I’ve got a few more statistics for you – covering the expected effects of the Coalition’s (let’s not forget the Liberal Democrat part in all this) benefits tinkering.
Thanks to this government, working families will lose £9 billion of support every year, according to Liam Byrne. But he said the welfare bill – barring tax credits – will not rise by the one per cent of the benefit uprating, but by four per cent – £8 billion – because the government is failing to create jobs. (Why not? We’ll come to that later)
More working people are in poverty than ever before, with the figure currently standing at a record 6.1 million, according to Karen Buck. She said, according to the House of Commons Library, if only out-of-work benefits were subject to the one per cent cap, but in-work benefits were uprated as normal, 80 per cent of the proposed savings would disappear.
Add changes to the personal tax allowance (increasing to £9,440 this year) to the effects of the Benefits Uprating Bill and working people take 60 per cent of the hit – in other words three-fifths of the drop in income will affect people in work, but they will be expected to take FOUR-fifths of the financial squeeze.
So now even the government’s flimsy claim to be standing up for working people is revealed as a tatty lie.
In each Conservative-held constituency, an average of 6,000 families will be worse-off, Mr Byrne said. Nationally, if the Bill is passed, of the 14.1 million working-age households with someone in work, seven million will be hit – alongside 2.5 million jobless households – so the Benefits Uprating Bill will reduce the capacity of 9.5 million of the UK’s 23-24 million households to pay their bills (Karen Buck).
According to Ian Mearns, 4.4 million jobs pay less than £7 an hour.
As a result of the Bill, five million people may resort to payday loans in order to balance the books for the end of the month, according to Chris Bryant.
He said a food bank is opening every three days and working people are using them to feed their children.
You see, the Government cannot make serious money out of an assault on out-of-work benefits alone – just three per cent of all welfare spending goes on Jobseeker’s Allowance, and all out-of-work benefits account for only three per cent of GDP between them (figures courtesy of Karen Buck)
And the reality is that the line between working people and the jobless is blurred, with people changing between being in and out of work all the time. Last year there were between 244,000 and 357,000 new claims every month for Jobseeker’s Allowance, while between 242,000 and 370,000 left benefit every month (Karen Buck).
Let’s look at the figures affecting both workers and the jobless. According to Liam Byrne, the Benefits Uprating Bill means a child benefit rise of 20p per week; maternity allowance would go up by £1.37 and Jobseekers’ Allowance by just 72p.
Getting back to those 2.5 million jobless – they will lose about £215 a year by 2016, said Karen Buck. Ian Mearns added that, according to the Child Poverty Action Group, a working family eligible for both housing and council tax benefit will gain only 13p a week extra as a result of the extended personal tax allowances.
Meanwhile, a millionaire’s income will rise by £2,058 per week as a result of the cut in the top rate of tax from 50 per cent to 45 per cent, according to Liam Byrne.
With less money to spend, more shops will close and more people will lose jobs (Chris Bryant). this is because money in the pockets of people at the bottom end of the income spectrum is far more likely to be spent, and therefore to keep the economy moving (Sarah Teather, one of the few Liberal Democrats who rebelled against the Bill).
The government would have you believe that the losses I have described above, and the poverty they will bring, could be avoided if scroungers stopped stealing money from the system through fraud, and got back to work.
But benefit fraud stands at 0.7 per cent, according to official figures, and the total number of available jobs (according to the Office of National Statistics) is 489,000.
And – for the third time in this article – there are around 2.5 million people out of work.
There aren’t enough jobs to go around.
So why do you think the government wants to make it impossible for those who are out of work to make ends meet?
This is about employers wanting to make sure they don’t have to pay too much of their profits away to their workforce – the people who actually make things and do things to generate the money – bear in mind that employers’ pay has risen to eight and a half times what it was 30 years ago, while workers’ pay has increased by an average of just 27 per cent.
Employers want to make sure workers stay in a weak position when bargaining for more pay. If there were more jobs available, or the number of long-term jobless was high, their position becomes stronger as they would realise they could not be replaced very easily.
Lots of people unemployed over the short term means more insecurity for those in work, so they’ll tolerate lower wages and won’t demand increases. The long-term unemployed are less of a threat to job tenure as they are more likely to remain out of work than take a working person’s job.
That’s how the ‘fat cats’ think. And they, of course, pay huge donations to a certain political party, currently in power, to ensure that they get their way.
Do you think I’m wrong?
Then tell me – by how much has the income of the UK’s top earners increased, in total, since May 2010?
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