UK’s ‘recovery’ offers little for normal families
A central political theme of the Summer has been Labour’s campaign on living standards. This draws attention to the fact that though the Government claims and increase in GDP, the benefits of growth are not being shared equally. Wages adjusted for inflation remain stagnant for most people, while food prices increase far faster and energy and housing costs boom once gain. Many families have also lost access to tax credits and child benefit which once buffered their household income.
Labour members recently introduced a debate to the House of Commons chamber on the topic, on the same day that research was released showing 1.4 million employees had been pushed below the level of the Living Wage by the Coalition’s policies. The UK has performed unfavourably compared to international competitors who have also had to contend with recession; while the UK’s prices have risen faster than any other developed countries wages have also fallen faster than any country in the G7. The distribution of these losses has particularly effected Wales; an 8% drop in real wages makes it the worst hit region besides Yorkshire and the Humber.
A primary cause of the fall in living standards is a rise in energy bills. The cost of heating and power has risen by £300 for the average family since the General Election. Labour’s announcement of a cap on energy prices promises that household bills will be capped for a twenty month period following a Labour victory in 2015. Energy companies must also return more of their profits into investment for the future, which is the long-term goal of Labour policy. This temporary price cap will be accompanied by more fundamental reform to ensure that the cartel of major energy companies is broken up and real competition introduced. The energy regulator Ofgem would also be scrapped to be replaced by a more powerful body, and there would be an automatic system whereby over 75’s are placed on the cheapest tariff.
ZERO HOUR CONTRACTS
Another impact on living standards comes in the form of insecure employment. Zero-hour contracts, here no weekly hours of work guaranteed yet employees are expected to remain under contract. Staff have increasingly been abused by employers seeking to reduce employee’s rights. Some contracts do help staff with flexible care or second job needs, but often they fail to reflect what is a regular working routine. The contracts have increased in number from 50,000 to one million since 2005.
Labour has pledged to outlaw exploitative use of the contract, by banning employers from demanding staff are available even if they have not been promised hours, by allowing staff to work other jobs whilst on the contracts and making sure that contracts reflect actual hours worked by staff in recent months.
Opposition mounts to restrictive PIP changes
I recently made a submission to a DWP consultation on changes to rules that determine what is considered significant mobility impairment. Current regulations stated that an ability to move 50 metres with an aid excluded somebody from the highest levels of disability benefit. However, Ministers intended to reduce this threshold to just 20 metres for the new Personal Independence Payments. The Government originally introduced this change without discussion with charities, and bizarrely claimed that it did not change the numbers that they expected to qualify for the higher rate of the benefit. This lack of due process resulted in a Judicial Review of the policy, embarrassing the Government into launching a consultation.
I argued that 50 metres is an accepted benchmark across services, from Blue Badges to town planning policy. 20 metres represents a highly restrictive benchmark. Few people whose mobility is limited to 25 or 30 metres would be able to use public transport or to afford taxis without the benefit. Not only would this reduce their ability to lead an independent life, it would also cost the Government more in ambulance usage and home healthcare visits.
It is essential that the Government listens to the mounting pressure on this issue and recognises the challenges faced by those whose mobility is severely restricted.
Conservatives propose further benefit restrictions
Recent reports suggested that the Conservative manifesto in 2015 may include a pledge to lower the cap on the amount of benefit one household can receive by a further £6,000. Currently notionally set at the average income of working families, £26,000, the proposal is to lower this to £20,000. Conservative ministers state that any future policy calling for a reduction would be based on the success of the current cap on increasing employment.
This proposal is just one of a series from leading conservatives on welfare reform. During his speech at party conference, David Cameron hinted that a future Conservative government might seek to prohibit those under 25 from having automatic access to certain benefits, notably housing benefit and jobseekers allowance if they refused to take up offers of work, training or education. The move is unlikely to be introduced before 2015 because the Lib Dems have already blocked similar proposals to curb Housing Benefit for under-25s.
ATOS TEST ‘DISCRIMINATES AGAINST THE MENTALLY ILL’
Two people with mental health problems won a legal challenge against the Work Capability Assessment, the Government’s method of determining to Employment and Support Allowance.
Judges at the Upper Tribunal ruled that the tests put people with autism, mental illness and learning difficulties at a serious disadvantage. They can struggle to gather the necessary documents and advice needed to make a successful claim. Lawyers and charities suggested that there should be a Government responsibility in these situations to seek more medical advice on behalf of the claimant. A third of all ESA claimants are making their claim mainly based on a mental health condition.
Labour has meanwhile called on the Government to sack the health assessors Atos.
Bedroom tax debts become clear
The full extent of the damage being wrought by the bedroom tax was made clear by recent research. It was found that one in three of those hit by the bedroom tax have fallen into arrears. Despite speaking to only a fifth of local authorities the research identified 50,000 tenants who are now living with the burden of housing debts. Other surveys have shown that less than a quarter of those affected had a viable option for finding new work or smaller accommodation.
In Anglesey and Wrexham up to 44% of those affected were pushed into arrears. Many more people who already had housing debts saw them increase due to the bedroom tax. Including these people, 74% of those affected in Carmathenshire saw their balance with the housing authority worsen. The level of debts is also high; 118 people are more than £500 in arrears in Swansea.
Concerns also remain that arrears could increase when Universal Credit is paid direct to the benefit recipient, rather than the landlord. Ministers have promised that a switch to landlord-payment will be available for some, though details remain scarce.
CHURCH TO ‘COMPETE PAY DAY LENDERS’ OUT OF BUSINESS
The new Archbishop of Canterbury Justin Welby has floated plans for the Church of England to take an active role in combating legal loan sharks. The Archbishop suggested that Church facilities be made available to local credit unions, and promoted through local networks and religious events. The Archbishop, whose background is in business, commented that he hoped to ‘compete [pay day lenders] out of business.’
Pre-tax profits at Wonga rose by more than a third in 2012 to £84.5m, with more than 1 million unique customers borrowing £1.2 billion. The Business Secretary was quick to support the initiative suggested by the Church to provide a viable alternative that would promote sensible advice alongside more reasonable rates of interest.
Other policy options being considered by a Labour review into modern high street include a requirement that local authorities make space for a credit union in the centre of towns, plus more powers to limit the number of payday lenders.
FOOD BANK CONTROVERSY EXPOSES GOVERNMENT PREJUDICE
The Education Secretary Michael Gove was recently attacked for telling the House of Commons that families were responsible for needing the help of food banks. ‘I appreciate that there are families who face considerable pressures,’ he said. ‘Those pressures are often the result of decisions that they have taken which mean they are not best able to manage their finances.’
This ignored research by the Trussell Trust, the biggest food bank operator in the country, which showed that delay or underpayment of benefit is the most common cause for a visit, 40% of the total. DWP Ministers have now told officials to stop issuing food bank stamps with delay notices. I visited a food bank in Bridgend and it was clear to see the link between government policy and the doubling in the number of people using food banks in Wales in the last year.
FREE at the point of use NHS under threat
Following the Chancellor’s Spending Review this June, the Social Market Foundation released a report stating that a ‘free at the point of use’ NHS cannot be maintained under the Government’s long-term spending plans.
The Conservatives put a pledge to protect the NHS at the heart of their General Election Campaign, and have kept the budget steady after accounting for the normal rate of inflation. However, the SMF report pointed out that prices increase faster in health care than in other areas. Other departments hit by Government spending cuts have reclassified their services, such as social care and medical support for troops, as NHS spending, leaving less money for more traditional hospitals and GPs. As the population increases and people live longer the total need for healthcare increases, stretching the existing budget.
Considering these challenges, the NHS would need to find £34 billion in efficiency savings in the next three years. It is more likely that charges will be introduced for users.
Labour used the party conference season to lay out plans to merge social care and mental health into the NHS framework, seeking to rationalise funding and ensure that NHS resources are used in the most effective way.