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 a former Labour cabinet minister and was MP for Neath between 1991 and 2015 before joining the House of Lords.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.