House of Commons Hansard Debates for 13 Mar 1991

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Family Hardship

7.25 pm

Mr. Michael Meacher (Oldham, West) : I beg to move,

That this House notes the increasing financial pressure families are facing due to the Government-created recession ; further notes that low-income families are now hit hardest of all by record house repossessions, fast rising unemployment, service cutbacks caused by the poll tax, and widespread benefit deductions ; and calls on the Government to adopt a Budget strategy that will tackle poverty rather than penalise it and in particular to increase child benefit to £9.55 per week per child and pensions by an extra £5 per week for a single pensioner and £8 per week for a married couple, to cut interest rates, and to abolish the poll tax.

Although almost every family has been hit hard by higher interest rates, higher mortgages and higher inflation in this

Government-created recession, low-income families have been hit hardest of all by record home repossessions, fast-rising unemployment, service cuts caused by the poll tax, and widespread compulsory reductions of benefit.

The Government's role in a recession should be to protect people from its worst ravages and to overcome it. In fact, the Government have done the reverse. They laid the foundations for the recession, aggravated people's experience of it, and are now blocking their escape.

Recently, home repossessions have been running at the unprecedented rate of nearly 45,000 a year, and the figure will climb even higher this year. The Government pressured people, through hefty discounts and right-to-buy schemes, into home ownership--which families on low incomes can ill afford- -and then pulled the rug on them with their own policies.

The Chancellor of the Exchequer insisted on using interest rates exclusively to control the excess demand that he had unleashed, which gratuitously forced up interest rates and mortgage repayments higher than necessary--and beyond the reach of thousands of low-paid workers.

Where low-paid workers become redundant, the Chancellor is restricting mortgage interest payments for the first four months, which will increase the number of people who are driven out of their homes.

Unemployment is being used as an economic weapon more harshly in Britain than anywhere else in the EEC--and the lowest-paid are again the main victims.

Mr. James Paice (Cambridgeshire, South-East) : Will the hon. Gentleman list those European countries which have lower unemployment than this country?

Mr. Meacher : If the Government had not made 30 changes to benefit calculations, and therefore 30 changes to the manner in which unemployment benefit is calculated, Britain would probably already have higher unemployment than most EEC countries.

Over the past year, unemployment in the EEC grew by 0.2 per cent. overall. In France, it rose by 2.9 per cent. ; Italy, 4.7 per cent. ; Greece, 15 per cent., and in the United Kingdom, 16.2 per cent. In Germany, unemployment fell by 14 per cent.

Mr. Peter Bottomley (Eltham) : What is this year's figure for this country?

Mr. Meacher : It is rising extremely rapidly towards 3 million by the end of the year.

Mr. Bottomley : Will the hon. Gentleman give way?

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Mr. Meacher : No. The hon. Gentleman has already made his point from a sedentary position and I answered his question.

Instead of assisting the victims of their economic mismanagement, the Government have penalised them. Ten years ago, the unemployed were entitled to earnings-related unemployment benefit. They received 100 per cent. of their rents and rates and all their mortgage interest was paid. Eighteen to 25-year-olds received adult rate benefit and 16 to 17-year-olds could claim. One-off payments were available for those on supplementary benefit for necessities such as cookers and beds. Even if someone lost a job because of a row with his employer, the penalty was limited to six weeks reduction of unemployment benefit.

A decade later, earnings-related unemployment benefit has been abolished ; housing benefit no longer covers the full market rent ; 20 per cent. of the poll tax must be paid ; mortgage interest payments are restricted ; and single payments have largely been replaced by loans.

Mr. Keith Mans (Wyre) : Will the hon. Gentleman give way?

Mr. Meacher : I will give way in a moment. Perhaps the hon. Gentleman is embarrassed by the length of the list. Eighteen to 25-year- olds now receive a lower rate of benefit than adult benefit and most 16 to 17-year-olds receive nothing at all. If an employer claims, however unfairly, that someone left a job unnecessarily, the Government stop unemployment benefit and cut income support by 40 per cent. for six months. The result of all that for tens of thousands of low-paid and average-paid workers is a spiral from unemployment to poverty and destitution.

Mr. Mans : Am I right in thinking, therefore, that the Labour party will reinstate earnings-related unemployment benefit? Is he going to give earnings-related benefit to those yuppies who have been made unemployed in the City after earning £100,000 a year?

Mr. Meacher : That was an interesting comment which we will recall before the general election. The hon. Gentleman suggests that people who are entitled to earnings-related benefit are yuppies. [H on. Members :-- "Answer."] I will answer in my own way. The people to whom I was referring were entitled to earnings-related unemployment benefit because they had paid for it through their national insurance stamps. A private insurance company that removed an entitlement gratuitously and one-sidedly would certainly be taken to court for breach of contract.

Growing cuts in local services are another feature of the deepening recession. Again, the families on the lowest incomes are hit hardest because they depend most on those services. I quote a few examples of cuts being made this year. Tory-controlled Berkshire county council must make £7.5 million of cuts to avoid capping. Those cuts include £1 million in social services involving reduced staffing in elderly person's homes, the closure of a sheltered workshop, increased home care charges and community service cuts, including major ones in library services, and the closure of a youth and community centre.

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Tory-controlled Ealing must make £10 million-worth of service cuts to cut its poll tax. Those involve the closure of two homes for the elderly, reduced spending on meals on wheels and an end to child care allowances for staff.

Tory-controlled Hillingdon must make budget cuts of £23 million to fulfill the Tory party manifesto pledge on the poll tax. Those cuts include the closure of a showpiece school with special facilities for handicapped children, an end to the school meals service and increased charges in a range of services for the elderly.

Mr. Jerry Hayes (Harlow) : Will the hon. Gentleman give way?

Mr. Meacher : I think that I know what point the hon. Gentleman wants to make, and I will probably make it for him if he will be patient for a moment.

Tory-controlled Warwickshire must make £500,000 worth of cuts in social services, with further possible social services cuts of £1 million to avoid capping. Last, but not least, Westminster council--as ever, Tory-controlled--must make cuts of almost £1 million in the social services budget, including proposals to increase home help charges and close two holiday homes, a residential care home and two play groups.

The evidence is consistent around the country, as the report of the Association of Directors of Social Services shows, and I would be the first to admit that it applies in Labour-controlled as well as Tory-controlled areas. The poll tax has become the juggernaut for the destruction of local social services. It was the Government's own flagship creation, and its victims are overwhelmingly the elderly, the disabled, lone parents and the unemployed.

Mr. Hayes : The hon. Gentleman has been good enough to be honest with the House. He knows that there are difficulties with some Labour- controlled authorities, of which Lambeth is an example. True to form, the hon. Gentleman said that it was all due to the wicked Tory poll tax. The name Joan Twelves might just ring bells for the hon. Gentleman. She is the leader of Lambeth council and she said : "Even if Labour wins the general election, no one in Lambeth can have any illusions that an incoming Labour Government is the cavalry riding to the council's rescue. It is more than clear that no additional resources will be available."

That was a quote not from the Tory press, but from Joan Twelves, the Labour leader of Lambeth council. Is she wrong or right?

Mr. Meacher : I am sorry that the hon. Gentleman has not read our report entitled "Fair Rates". I should be happy to send him a copy and I am sure that after today's debate Conservative Members will read that document most carefully. The document proposes, among other things, a change in the balance of the costing of local government finance between Exchequer grants in the centre and the local raising of finance. It is precisely for those reasons that hard-hit local authorities such as Lambeth can, under our fair rates system, expect significant assistance.

Support services that are often crucial to keeping a family afloat have been shut. Personal and family budgets have also been cut drastically because of rising indebtedness. The latest figures show that one household

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in 20 now has rental debts. At the end of 1990, 159,000 owner-occupier households had mortgage arrears. In 1979 the figure was 8,000. There has been a twentyfold increase.

Mr. Jonathan Sayeed (Bristol, East) : Will the hon. Gentleman give way?

Mr. Meacher : No, I want to make progress, because I have a lot to say.

In 1979, 2,500 homes were repossessed. At the end of 1990, 44,000 were repossessed. That is a seventeenfold increase. Perhaps most serious of all, in 1989, the year for which the latest figures are available, 2 million households had problems repaying debt including more than 500,000 with serious problems involving arrears to creditors that were more than three months outstanding.

Mr. Peter Thurnham (Bolton, North-East) : Will the hon. Gentleman give way?

Mr. Meacher : I will give way later.

Now, 18 months later, the number of families crippled by debt will be significantly higher. Those on the lowest incomes are hit even harder. They often have the biggest debts and the smallest incomes to meet them. Income support is now only one eighth of national average earnings, yet the Government have taken powers to reduce it further by compulsory deductions of benefit.

Of the miserable sum of £37.60 a week, which, as I said in a previous debate, is the figure for income support for a single adult, something of which no Minister was aware, up to 15 per cent. can now be deducted for housing, gas, electricity or water debts, and up to another 10 per cent. can be deducted for current liabilities for the same items.

Miss Emma Nicholson (Torridge and Devon, West) : Will the hon. Gentleman give way?

Mr. Meacher : I am finishing my point. In addition, the Secretary of State has laid it down that another 5 per cent. can be deducted for social fund loan repayments and that a further 5 per cent. can be deducted for poll tax arrears. For those two items alone, for which the right hon. Gentleman himself is directly responsible, according to his own estimates, in the current year 1.25 million claimants are being forced to live below the income support poverty line--a situation that previous Governments had never even countenanced, let alone engineered.

However, the right hon. Gentleman proposes to go even further. He is about to introduce a Bill to allow another 5 per cent. to be compulsorily deducted from an unemployed father on income support for payment of child maintenance. The Home Secretary proposes that yet another 5 per cent. can be deducted from income support for payment of a fine. Frankly, the right hon. Gentleman can pay himself the tribute that none of his predecessors ever received--income support, which used to be the sacrosanct safety net below which nobody would ever fall, is now so riddled with holes that the principle of protected poverty line income has all but disappeared.

The previous Secretary of State, the right hon. Member for Croydon, Central (Mr. Moore), liked to tell us that poverty did not really exist. The present Secretary of State has clearly taken him at his word and virtually abolished the poverty line.

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Mr. Sayeed : The hon. Gentleman will know that the previous Labour Government cut support to the family by nearly 8 per cent. in real terms. Why should anyone trust the Labour party to assist families in future?

Mr. Meacher : We continued to increase the value of child benefit throughout our period in government. It is amazing that a Conservative Member could be so foolish as to suggest that his Government's record on family support is not appalling. During the previous election, the Government said that they would continue to pay child benefit, but, with utter cynicism, they froze it a few months after the election. They have kept it frozen, with the one exception of an increase for the eldest child.

Miss Emma Nicholson : Will the hon. Gentleman give way?

Mr. Meacher : No, I shall not give way.

We hold the Government guilty on three counts. First, they generated the recession in the first place by their own gross economic mismanagement. Secondly, for all the reasons that I set out, they have gratuitously and deliberately placed the brunt of the hardship that their recession has caused on the most vulnerable and helpless group in society. Thirdly, they are now blocking the escape routes that families are seeking out of the predicament which they, the Government, have caused. I intend to pursue that third charge.

Miss Emma Nicholson : Will the hon. Gentleman give way?

Mr. Meacher : As the hon. Lady is extremely persistent, I shall give way before I make my next main point.

Miss Nicholson : Does the hon. Gentleman agree that his mortgage statistics are somewhat flawed? The fact that there are now 3.5 million more home-owners means that the percentage rise must be set in a much larger context. More than 98.3 per cent. of people with mortgages are not in serious arrears. In 1990, fewer than half of 1 per cent. of all mortgagors had their homes repossessed.

Mr. Meacher : The hon. Lady is certainly well equipped with statistics which she has learnt by heart. However, perhaps she would be good enough to recognise that 159,000 people in mortgage arrears is unpreceden-tedly bad. There has never been a time since the war, when home ownership was lower, when anything like that number of people has mortgage arrears. The number of people with severe mortgage arrears who are being turned out of their homes is 44,000. I hope that the hon. Lady accepts that the Government have forced 44, 000 people out of their homes. Is not that a disgraceful record?

Miss Nicholson : Will the hon. Gentleman give way?

Mr. Meacher : No, I shall not give way. I wish to make many further points.

What families on the breadline want is work, but the Government are not only rapidly pushing up unemployment as the main regulator of demand because they refuse to make any use of credit controls, they are--it is almost unbelievable folly in the pit of the

recession--cutting training and enterprise council training budgets by £300 million. The Government are apparently ready to spend £16 billion this year on unemployment benefit, income

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support and tax forgone from the unemployed, but they are not prepared to spend a tenth of that sum on providing training to enable people to be employed.

The education training programme for the adult unemployed has been cut by more than 20 per cent. Also, 10,000 training places in the voluntary sector are now at risk, yet we are told in today's papers that the Government's latest temporary work scheme will not have any appreciable training element. Britain is the only country in the Economic Community in which youth unemployment rose last year. It rose by 17 per cent. in this country, whereas it fell by 20 per cent. in Germany, yet the Government have still not put a jot of extra money into youth training and they are still denying 16 to 17-year-olds virtually all entitlement to benefit. That is why cardboard city is still growing.

Mrs. Teresa Gorman (Billericay) : Will the hon. Gentleman give way?

Mr. Meacher : I shall give way for the last time.

Mrs. Gorman : Is not it true that the Government's policy now guarantees 16 and 17-year-olds a place in training? They do not need the benefit because they have somewhere else to go to spend their time.

Mr. Meacher : In that case, perhaps the hon. Lady would like to come along the Strand with me tonight and look under a number of bridges, in particular Waterloo bridge. She will find that hundreds of, if not a few thousand, young people are sleeping rough. That is a direct result of the Government's policy.

In terms of benefits, the Government are making it harder, not easier, to return to work. For example, I refer to the £43 a week means test on unemployment benefit which the right hon. Gentleman imposed last year. If a part-time worker now works for one or more days a week, he or she loses a whole week's benefit. That is a major disincentive to people taking up part -time work.

The unemployment trap actually sharpened last year. The Government's own document on expenditure plans for social security, which was published last month, shows that more people now lose 50p to 99p in every extra pound they earn this year than they did last year. Family credit is the Government's flagship policy for getting the low-paid back into work, but it is now emerging as the biggest hype of the decade.

That same report shows that, despite costly advertising, only 50 per cent. of those entitled actually claimed. That percentage is no higher than it was for family income supplement. It shows that it still takes three days longer to get family credit than it took to get family income supplement. It shows also that the family credit error rate is four times higher than it was for family income supplement.

Mr. Thurnham : Will the hon. Gentleman give way?

Mr. Meacher : I shall not give way again.

Mr. Thurnham : On a point of order, Madam Deputy Speaker. The hon. Gentleman said earlier that he would give way to me later. He now says that he will not give way.

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Madam Deputy Speaker (Miss Betty Boothroyd) : It is not a matter for the Chair whether the hon. Member gives way.

Mr. Meacher : The hon. Member for Bolton, North-East (Mr. Thurnham) will have to be quicker off the mark in future. I have given way so many times that it is in the general interest of the House that I should make progress.

Ministers are making it clear that they have no use for or are even opposed to a family policy to help people out of recession. The Minister of State, Home Office, the right hon. Member for Mitcham and Morden (Mrs. Rumbold), gave an interview this month to the "Family Policy Bulletin", which is published by the Family Policies Study Centre. The article states :

Asked if there was no need for a Government family policy, she replied that there was a great deal of truth' to the suggestion." The article went on to state :

"Despite acknowledging the need for an expansion of childcare to help women who wished to combine motherhood with a job, she said she did not mind Britain lagging behind its European partners in publicly funded provision."

The right hon. Lady also stated--I stress that these are her actual words :

"I am antipathetic to the notion that there should be universal access to child care :-- creches for all'. It simply exacerbates the trend that we have had of seeing that it is possible if you've got responsibilities to put them on to the state."

The Minister displays an extraordinary degree of blindness or indifference to the problems of families who are struggling on the poverty line. Obviously, she has not read the National Audit Office report, "Support for Low Income Families", which was published six weeks ago. it said that half of all income support claimants who were interviewed cited the need to look after children as the barrier to finding full-time work. Nor has the right hon. Lady read the previous report of the National Audit Office, which pointed out that the Government were undermining their pretensions to helping parents to work by refusing to allow claimants to offset their child care costs against earnings and by running down child care provision. However, I am glad that the right hon. Lady then had the grace to express support for raising child benefit, but she added, "as and when the country can afford it".

Mr. Ian Bruce (Dorset, South) rose--

Mr. Meacher : No. I shall not give way, because I wish to answer what the Minister of State said.

As the Secretary of State has direct responsibility for both these actions, perhaps he can explain how he can afford £1.3 billion for bribing people to take out highly speculative personal pensions, yet he cannot afford to spend half that sum to restore the real value of child benefit after his four-year freeze--

Mr. Ian Bruce : Will the hon. Gentleman give way on that very point?

Mr. Meacher : No. I am not interested in the hon. Gentleman. I am interested in the Secretary of State, who is responsible for these policies. If the right hon. Gentleman wishes to answer, I shall give way, but he does not need a nanny.

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How can the Secretary of State pretend to have a family policy until he has an answer to my question about priorities? I should be very glad if he could answer me now.

The Secretary of State for Social Security (Mr. Tony Newton) : I shall just say one thing now to the hon. Gentleman, because there are several points that I should like to make in my speech. As I said in my uprating statement, a family policy does not concern itself only with families with children--as the hon. Gentleman so often implies--important though they are. Families consist of elderly relatives, pensioners and disabled people and involve a whole range of responsibilities. Anybody in my position needs to look across the board to balance the help and support that he gives.

Mr. Meacher : I could not agree more. In that case, why have the Government given such a bum deal to the pensioners, the disabled, lone parents and all those who depend on benefits? All those groups, especially pensioners, have faced a huge erosion in their benefits, to the tune of £22 billion, as we have said before in similar debates. I notice that the right hon. Gentleman cannot answer the question that I put to him.

Mr. Mans : The hon. Gentleman did not answer mine.

Mr. Meacher : As higher child benefit is a major way of helping more lone parents back into work, I am sure that Mrs. Sandra Cocking from Dewsbury, whose letter I have with me, would be extremely interested in the Secretary of State's answer. She stated : "I am writing to you for information and help"--

[Interruption.] I see that the right hon. Gentleman is getting some help from other sources and I am glad of it because he needs some assistance in this debate.

The letter continued :

"I am a single parent of three children and work 25 hours a week as a receptionist at B.R.B. Batley, West Yorkshire.

I have always tried to support myself and my three children, but when you try to help yourself today, you end up worse off."

Mr. Ian Bruce : Will the hon. Gentleman give way about child benefit?

Mr. Meacher : No, I am not giving way. [ Hon. Members :-- "Give way."] I have made it perfectly clear that I shall not give way again, except to the Secretary of State.

That lady then gives a summary of her weekly income, both when working and unemployed. It shows that she is about £15 a week worse off when working. When will the Government ever learn that the biggest disincentive to lone parents returning to work is the Government and their failure to motivate a major extension of child care provision throughout the country and to provide for some offset against what are often otherwise prohibitive child care costs? If the Government are not prepared to assist people who are making efforts to overcome their own problems in a recession that the Government have foisted on them, at least they should not actively hinder them.

I have with me another letter, a copy of which I have sent to the Secretary of State. This is from Mrs. Dundon of Sherwood, Nottingham, and speaks volumes about the problems that I have encountered in my constituency clinic and which other hon. Members have no doubt encountered, too. Mr. Dundon lost his job after an accident. After he visited his local DSS office in

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