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Mrs. Gorman: I do not for a moment doubt the hon. Gentleman's sincerity, but I want to ask him two questions. Is not a low wage better than no wage? Is not it true that some occupations simply cannot produce enough profit to pay high wages? The hon. Gentleman appears to be decrying the Government's policy--which is to be commended--to top up low wages with income support.
Mr. Cohen: In my opinion, a low wage is not good enough. That is why I support a national minimum wage. The real answer to the hon. Lady's question is that many people do not agree that a low wage is better than no wage at all so they stay on benefit because there is absolutely no advantage in getting a job. That is the poverty trap. It is no good taking the Conservative option of cutting their benefits altogether. That throws more families into poverty and punishes their children. That is not just my opinion, but the opinion of people who live in the real world who have to balance their budgets.
We must have a proper level for wages. More than1 million people now earn less than £2.50 an hour. It is hard to imagine how they can support themselves and their families on that. Two thirds of that number are women. Many youngsters are exploited, which gives them a bad start in life. Often, they have to do menial work. Although that is only to be expected because they are just starting work, it is demoralising to get poverty pay. That also makes it difficult to encourage young people into the world of work.
Poverty pay is also damaging to the middle-aged--the 40 and 50-year-olds who still want to work--because increasingly they are told that if they want to work they must accept the same low wage as a young person would accept. If they do not, they are forced out of the labour market and their skills are wasted. Low wages are a burden and that is reflected in the business before us.
A high proportion of people in the dole queue are long-term unemployed and, when they look for work--many of them are still trying, despite being demoralised--they are told that, because they have been out of work for a long time and have nothing worth while on their curriculum vitae, they must be bad workers, so they are not taken on. That is what employers tell them. If the long-term unemployed take work, they are taxed and the marginal rate comes into play. It is hardly worth their while--because they lose their benefits--especially if they move to a low-wage job.
I apologise in advance to hon. Members, but I want to tell a personal story. My foster son, Mark, is a lovely lad and a good father to his children. He is a young man,just 21, and has a second family. He is caught in the poverty trap. He is on benefit, but if he got a job to support his second family he would be caught by the child support rules. I am not disputing that principle, but the poverty trap is so great that I cannot see him being able to get a job that pays enough to make it worth his while after loss of benefits. That is my personal experience; many other families have the same problem. I ask the Minister to address that point and tell me whether anything in the upratings will make it possible for people such as Mark--there are many of them--to get a job.The Child Support Agency's actions lead to just one of the poverty traps that keep people out of work when they want to get a job.
A programme of welfare into work is crucial, and it is the policy of the Labour party. The environmental task force support for small businesses--to help them to take on young people at a wage which is at least the benefit level plus £20 a week--will help those who are trying to break out of the poverty trap that affects so many young people.
It is terrific that the Labour party has proposed a national minimum wage that will tackle the problem of low pay. That will be an issue at the general election. The Government can huff and puff about the effect of a minimum wage on unemployment, but if it is set at sensible level it will have no effect on unemployment whatever. On the contrary, it will lift many families out of poverty. That is crucial.
Mr. Nigel Evans:
The hon. Gentleman's comrade, the right hon. Member for Kingston upon Hull, East(Mr. Prescott), said that there would be a shake-out if the minimum wage were introduced. How many jobs is he prepared to lose to introduce a minimum wage?
Mr. Cohen:
The shake-out will be of people who are unemployed back into work. That is what will happen.
Mr. Cohen:
Yes, it will. The discussion of that point will continue in the build-up to the election, but the arguments in favour of a national minimum wage are overwhelming.
Mr. Deputy Speaker (Mr. Michael Morris):
Order.I am sure that the hon. Gentleman will return to that
Mr. Cohen:
I was making the point that, if people were paid a decent wage, they would not be dependent on social security. I am sorry that I did not make that clear.
Mr. Alan Simpson (Nottingham, South):
Does my hon. Friend accept that many employers are now increasingly concerned about their obligation to pay tax to pay for the benefit system? The good employer,who pays a decent wage, also subsidises the awful employer, who pays a lousy wage. In that sense, disproportionate, unfair and unequal burdens are placed on the best employers to support a social wage that many lousy employers do not pay.
Mr. Cohen:
My hon. Friend makes an excellent point. The Government's low-wage approach subsidises the worst employers. We must change that approach. I noted your earlier comments, Mr. Deputy Speaker, and I shall move on.
The Government broke the link, which existed before 1979, that ensured that pensions would rise in line with earnings or prices, whichever went up the most.As a result, a single pensioner has lost more than£20.30 a week and a married couple have lost more than£32.70 a week. The Government have robbed pensionersof £10 billion a year by breaking that link.
I received a letter, dated 16 January, from Age Concern, which has recently produced a report called "Short Change"--although £10 billion a year is not short change. The letter states:
On that point, the amount of unclaimed benefit is still more than the amount lost through fraud. The Government should be working to ensure that those who are entitled to benefits get them.
Just as in society as a whole, the gap between the poorest and richest pensioners is growing. The gap between the pensions of those who are fully reliant on a state pension and those who have occupational pensions is getting wider. The Government have relied on the occupational element and claimed that more people will have private pensions. That will happen over time,but many people will have gaps in their employment. Some people might have seven or eight gaps in their working lives, and in those gaps their pension contributions will suffer.
The Government's reliance on private pensions to top up pensions to a decent level overall is misguided.That is shown in the statistics that are set out in this month's Labour Research, which I bring to the attention of the House. It states:
That percentage
The article continues by pointing out that
Another interesting passage tells us that UK workers benefited from occupational pension schemes. That is where the gap with the Europeans begins to close,but even with an occupational pension scheme UK pensioners receive 77 per cent. of their previous net earnings compared with the EU average of 88 per cent., which includes 92 per cent. in Germany, 87 per cent.in France and 90 per cent. in Italy.
In other words, those who rely on the basic state pension are extremely badly off. Even with the occupational element, pensioners in the UK are much worse off than their counterparts in the rest of Europe. That is especially true of women, who have often had a working life disrupted.
Figures from the Department of Social Security show that, in 1993, only 57 per cent. of single pensioners and 72 per cent. of pensioner couples received occupational pensions. Men are more likely to have one than women. Those who worked for large employers are much more likely to be covered than those who were employed by smaller concerns.
"The report . . . shows that half of pensioner households depend on pension and benefits for at least 75 per cent. of their income and that two thirds of pensioners have incomes so low they pay no income tax. Though the number of pensioners who receive an occupational pension has increased, only 30 per cent. of all single pensioners receive more than £20 per week from them. A low state pension, inadequate benefits and the 'poverty trap' all conspire to create increasing financial hardship among many older people . . . Age Concern welcomes the Government's belief that the state pension is 'the cornerstone of retirement', but we believe that it should be raised to 33 per cent. of average earnings for single pensioners and 50 per cent. for a couple . . . We also want to see more encouragement of take up of benefits. About one third of eligible pensioners did not claim income support to which they are entitled."
"An opinion survey carried out by the European Commission in 1992 found that 66 per cent. of all adults in the UK thought that the main problem facing older people in the UK was 'not having enough to live on/financial difficulties'."
"was well above the average for the whole of the European Union--48 per cent."
"if you depend on the state, or on a minimal personal pension,you will be badly off in the UK, and certainly worse off than in other European countries . . . UK pensioners who depend entirely on the compulsory element of the pension system . . . are the worst off in Europe when comparing their pension with previous earnings".
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