The coalition's Dickensian welfare cuts are terrorising the poor

Ministers either don't know about the devastating impact of their policies in areas like Neath or just don’t care.

If Britain’s working poor can be cast as so many Oliver Twists condemned to the workhouse, then this government is surely Mr Bumble, looking aghast at a starving child and exclaiming "more? You want more?"

It’s a sad fact of life in 2013 that ministers either don't know about the devastating impact of their welfare cuts or just don’t care. Many of my Neath constituents are, in the stark words of one, feeling "terrorised". The impact can indeed be terrifying in communities in south Wales, which for historical reasons have lower wages than average, higher unemployment, more industrial injuries, more disability and therefore more benefit claimants.  

Far from conquering poverty and making it pay to work, as ministers cosseted away in the Westminster bubble constantly profess, their policies are having the reverse effect. Since Parliament returned after the new year, every week has seen yet more bad news for those who live with a Sword of Damocles hanging over them.  Ironically, these reforms are hitting those in work and on low pay the hardest, including 6,200 people in Neath who rely on benefits to top up their meagre incomes, but are now having their tax credits removed. 

Government suggestions that they shore up their income by taking on more hours simply ignore local reality. Many part-time workers will be competing with the thousands more that are unemployed in the Neath labour market, where as many as six people have been chasing every vacancy.

Under-employment is also a growing trend.  In 2005-2008 (pre-recession) there were, on average, 86,000 underemployed workers in Wales, a fairly average underemployment rate of 6.5 per cent of the working age population. But in the last three years, 2009-2012, there were an average of 134,000 underemployed workers in Wales, an underemployment rate of 10.3 per cent  – nearly half as much again as the standard rate – an increase of 48,000. That’s one in ten Welsh workers being thwarted from working as much as they wish – often thwarted from bringing themselves above the benefits threshold. There simply are no extra hours in the south Wales economy for people to work the fuller week they want to.

Furthermore, how are they supposed to compete in an already saturated labour market against hundreds of youngsters between the ages of 16 and 24 who every week are demoralised by being rejected as both "over qualified and under experienced"?

As for the carers, who must balance work with other duties, when will these extra hours fit into already unmanageable timetables? Being in work should always be preferable to relying on welfare, but this will only be the case if the government helps to create jobs and guarantees a living wage across the public and private sectors. As long as full-time work is so badly paid that it falls beneath certain welfare thresholds the case for removing those benefits cannot be made in good faith.

An impact study undertaken by Sheffield University shows Neath to be one of the worst affected constituencies. An old industrial area dominated in the past by coal and steel, we have a legacy of incapacity – one of the highest counts in the country with around 6,000 people in receipt of incapacity benefits. When she shut coal mines and heavy industries in the 1980s, Margaret Thatcher dumped many on to what was then termed 'invalidity benefit' to conceal the true level of unemployment: most never worked again.

Official estimates suggest that over a third of them will now be assessed 'fit for work', stripped of their incapacity benefit and arbitrarily forced to seek jobs which either don’t exist or, if they do, are likely low-paid, part time, temporary – or a combination of all three. They face a future of stigmatisation by local Job Centre workers forced to administer oppressive regulations and procedures designed solely to cut the welfare bill, not to increase job opportunities.

People with serious health problems, including cerebral palsy, hemiplegia and a speech impediment have previously worked in sheltered employment in the local Remploy factory.  But it is now being closed. One constituent taking over twenty tablets a day, and in and out of hospital, was found fit for work: hard working people are being made to feel tawdry and ashamed by the government.

Now being added to this chaotic and upsetting process is the payment of housing benefit to tenants rather than landlords, ostensibly to teach 'responsibility', but loudly denounced by addiction and mental health charities as fundamentally misunderstanding the predicament of vulnerable citizens.

Cynically parading their 'scroungers' versus 'strivers' bile – lapped up by government supporting newspapers – ministers demonstrate wilful ignorance about the realities of poverty, unemployment, lack of jobs and welfare reliance, and the highly complex causes.  Far from promoting a sense of pride and opportunity, government 'reforms' humiliate through dehumanising assessment tests performed by quota-ticking, private sector drones like ATOS.

Ministers must know that their zealous drive to cut the deficit, no matter what, will result in 500,000 disabled people being worse off under the new Universal Credit on top of big cuts to child disability payments.

Where is government compassion for the countless people who will face difficulty heating their homes or putting food on the table as well as having to go without specialist equipment and care? Far from removing obstacles on the route to employment, the government is creating huge road blocks for those with disabilities.

Do ministers also comprehend that few will be affected solely by one of these cuts? Disabled single parents stand to lose twice over. Take the new 'bedroom tax'. Disabled people will no longer have a spare room for relatives to come and stay to take care of them. One of my constituents is a carer for his severely disabled, bed-ridden wife, who hardly sleeps at night and has the TV on constantly, yet the government is to deprive him of his second bedroom, and there are no local one-bedroom homes available. Meanwhile young families won’t be able to have a relative to stay to ease soaring childcare costs, forcing people out of work and onto benefits in order to look after their young children.

In Neath we have bedroom tax cases of parents who have separated – the parent who does not have full care of the children but may have them on the weekend is not considered eligible to have a ‘spare room’, so either has to pay the extra rent or leave the child without a roof to sleep under. 

Neath is one of 69 areas in Wales where more than half of all children are living in poverty with a household income totalling less than 60 per cent of the average. These official figures are shocking enough without taking into consideration the rising cost of living with utility bills and food prices spiralling. The benefit cap will push a further 200,000 children across Britain into poverty. Material deprivation, which is a key indicator of poverty includes the inability to afford clothing or bedding, a situation that will become a reality for another 400,000 children by the end of this parliament.

Neath Foodbank has seen over 1,600 different people in 12 months – half of them working and desperate. I had to refer one young man who had suffered a breakdown because all his benefits had been stopped – and he was starving.  Meanwhile, voluntary groups’ budgets have been savaged and the once busy Citizens Advice Bureau office has been forced to shut because of the cuts. Some 'big society' this is.

Neath Port Talbot County Borough Council's excellent Welfare Rights Unit is deluged with distraught people needing help with an appeal against one arbitrary decision after another. So is my constituency advice office. 

Viewed from Neath, the prospect of returning the country to a Victorian state of dependency on a handful of charitable do-gooders is all too real; the image of the government as a cabal of Dickensian villains rings only too true. 

Work and Pensions Secretary Iain Duncan Smith speaks at last year's Conservative conference in Birmingham. Photograph: Getty Images.

Peter Hain is MP for Neath and a former Labour cabinet minister

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR