Examination of Witnesses (Questions 400
- 413)
TUESDAY 6 MARCH 2007
MS SUE
MIDDLETON AND
MR GUY
PALMER
Q400 Mr McGovern:
Forgive me if I sound a bit parochial, but it is the Scottish
Affairs Committee; where you are making these comparisons and
saying Sweden is the obvious one, do you mean to compare it with
Scotland or the UK?
Ms Middleton: I am not going to
get into a debate about independence for Scotland.
Q401 Mr McGovern:
Neither am I.
Ms Middleton: That is like saying
why compare it with anywhere then; we would have to compare it
with one of the German Länder, one of the German regions.
Q402 Mr McGovern:
The comparison is with the UK then?
Ms Middleton: Sweden has a similar
population to Scotland, does it not, I think, if my memory serves
me correctly, as does Norway actually, as does Austria, so it
seems, in population terms, it is of a similar size. If there
are issues around the way in which you can deliver systems within
a state, or within a society, it seems sensible to make comparisons
with a society of a similar size. My other reason would be on
a UK level; my personal view is that we have looked far too much
to America, Australia and New Zealand, in seeking solutions, rather
than looking closer to home, at some of our neighbours in Europe,
to seek solutions to the problems with which we are faced.
Mr Palmer: One of the things I
was trying to say in my introduction was, I think one of the issues
for you is, as a Committee, are you concentrating on the UK policy
agenda as it applies in Scotland, ie tax and benefits, etc, or
are you going to concentrate on things the Scottish Executive
might do differently from the way it is done in England; and I
think they are very different agendas. A lot of the questions
you have been asking today have been actually about the UK tax
and benefits system.
Q403 Mr Wallace:
Employment law, the tax and benefits system, is a UK issue, and
the only thing that you would say is, one of the main other contributing
factors is the NHS, which is devolved, and education, which is
devolved. The interesting thing about the lone parent family is
that is a benefits issue too.
Ms Middleton: Then again, housing,
and, of course, there are immense housing issues in Scotland,
which are devolved. As I said in my paper, I find it difficult
to write but, as you are the Scottish Affairs Committee of the
UK House of Commons, I decided to focus on matters which therefore
were reserved to you. Obviously, that is mainly the tax and benefits
system, but I did mention briefly in the paper that one of the
things is, with unemployment and the New Deals, and I think again
that is a UK issue, but one which could be usefully thought about
in Scotland, how you could make the New Deals more flexible to
deal with more specific, local issues. You raised it, because
you mentioned employment law, which set me thinking, and I think
there are opportunities there for specific pockets of unemployment.
Q404 Chairman:
Has the Foundation done any research into what should be the level
of the National Minimum Wage to help alleviate poverty in Scotland
and in the United Kingdom?
Ms Middleton: This is one of my
particular interests. That is the issue, is it not, that we have
talked about a relative measure of poverty, which, I absolutely
agree with there, has to remain, but really it does not have much
resonance, does it; 60% of the contemporary median before or after
housing costs, including or excluding the self-employed, it is
not exactly a buzz, is it; and, we do not know exactly, what does
that mean, what does that buy. Does having a 60% of median income
actually give you a lifestyle which you would accept as not being
poverty; what does it give you, and I think the same applies to
the minimum wage. Does the minimum wage actually buy you a standard
of living that we would accept is adequate; and this has been
an interest of mine for many years. We are in the process, for
the Foundation, at Loughborough and York, of developing what we
are calling a minimum income standard for Britain, where we have
brought together the best methodology that is known, the two best
methodologies that are around for developing minimum income standards
and combined them to undertake a major project to arrive at something
which can be widely accepted as a minimum income standard. That
is going to have all sorts of uses. I have always argued that
the minimum income standard should be developed outside of Government.
It is not for Government to develop a minimum income standard,
it should be done outside of Government, because Government then
has to think about whether they can afford to meet that standard,
in terms of whether it be the minimum wage or benefits or whatever,
against all the competing priorities that the Government has.
I think it would be of immense value in showing us exactly what
people need to live an adequate standard of life, we would be
able to understand much more, I think, about what is meant by
poverty, what you go without, and all those other things.
Q405 Mr McGovern:
As I am sure you are aware, fuel poverty is defined as a household
having to spend more than 10% of their income in order to maintain
some sort of adequate heating. When we were in Dundee recently,
which is my home city, we heard evidence there that some households
in Dundee actually are spending over 40% of their income on fuel.
How best do you think we should tackle that; should it be the
UK Government providing, as you have just mentioned, a higher
minimum wage, or should it be boosting benefits, or how would
you see it?
Mr Palmer: Clearly, fuel prices
are one issue, and one of the noticeable things about fuel poverty
policy in all the parts of the United Kingdom is they exclude
fuel prices from their remit, for what it is worth. I might come
back to that in a second. We are doing a piece of work in England
at the moment and basically it is concluding that if either you
eliminated income poverty or you eliminated energy-inefficient
homes, either of those things, you would eliminate fuel poverty.
The way to tackle fuel poverty is either to do something about
income or to do something about fuel prices, or to do something
about energy inefficiency, and you can make great inroads on any
of those three fronts.
Q406 Mr McGovern:
Do you think any of that is happening? Energy efficiency strikes
me as something which certainly is encouraged.
Mr Palmer: In energy efficiency,
there have been great strides. Fuel poverty has come down a lot
in Scotland over the last decade, and one of the reasons for that
is improved energy efficiency. Most new homes now are energy-efficient
and there is quite a lot going on to improve the energy efficiency
of existing properties. Things are happening on that front. I
think the biggest risk is fuel prices. The latest data in Scotland
is for 2003-04, on fuel poverty. My calculations would say that
maybe the number of people in fuel poverty has doubled since then,
because of fuel price increases, and mainly the people they affect
are the elderly and single people, because fuel is a bigger burden
on small families than it is on bigger families, for reasons I
could explain, if you wished.
Q407 Chairman:
Can you tell us the two most important things the Government could
do to alleviate poverty generally?
Ms Middleton: I would say, accept
that work incentives are not an issue and increase "out of
work" benefits, and I would change the regulations for tax
credits in couple families.
Mr Palmer: Strategically, I would
say the challenge is to reduce the prevalence of low pay, and
that the way to tackle that is to start by looking at low pay
in the public sector. My second one, I am not sure how much it
would reduce poverty, certainly it would be beneficial to a group
of people who are very badly off at the moment, is increasing
benefits to adults without children. "Out of work" benefits
for adults with children have gone up quite sharply over the last
decade, but "out of work" benefits for adults without
children have frozen, over the last decade. I have never really
heard anyone argue why that is right, it sort of happened a bit
on the sly, and you cannot freeze "out of work" benefits
for people without children for ever; they have been frozen now
for 20 years.
Ms Middleton: Reports of what
has happened is what they are saying is correct but of course
it is the adult element of "out of work" benefits that
has been frozen or has increased only slightly. What is happening
with families with children on "out of work" benefits
is, yes, they are getting Child Tax Credit, which is being increased
in line with earnings, but the adult elements of the "out
of work" benefits are frozen, so that, in combination, if
you are a child in a family with "out of work" parents
your income is still falling behind, because the adult elements
are frozen, or increasing only very slightly, so it is an issue
for them as well.
Q408 Mr Davidson:
Presumably, part of the argument around that is the question of
the way out of poverty for non-child adult households is into
employment. I find it very difficult to accept that we should
leave aside the question of incentives. Certainly, again, in an
area like mine, I think this issue about people genuinely making
a choice between whether or not it is worth their while going
to work for an extra £10, or £15, or £20, or so,
is a decision that people make. Quite a lot of the people in my
community have made a lifestyle choice, they have preferred to
accept less money on the basis that they will continue on benefits
and have made the appropriate adjustments. If we provide them
with more money they are much more likely then simply to remain
unemployed and not seek work in any way whatsoever, and to some
extent that ties in, I think, does it not, with the issue about
rising numbers of people with disability? Quite clearly, again,
in a constituency like mine, which is part of Glasgow, there are
substantial numbers of people who are registered disabled who
have been given that status as an act of generosity, in the sense
either to keep them off the register or because there is a recognition
that financially they would be better supported, registered disabled,
and there was little chance, at that stage, of them getting into
work. This whole issue of incentives, and so on, it should not
be adopting a view which is quite at variance both with my own
experience but also certainly at variance with Government policy.
It is not necessarily a bad thing, but do you want to respond
to that?
Mr Palmer: I am not against there
being incentives to get into work, but the point is that currently
the "out of work" benefits are frozen, so, if you like,
those incentives are getting greater year on year. At some point
in time, it is unsustainable. Currently, if you are a single adult
your Income Support entitlement is £55 a week. At some stage,
that is leaving people on extremely low levels of income. There
is not an incentives problem, in the sense it is miles lower than
they would get if they were working.
Ms Middleton: I would go back
to the point that, yes, obviously there are examples, but we should
not work from a micro level issue to a macro level problem. You
can raise questions about the history of incapacity benefit and
people being registered as disabled, and so on, which is a whole
different debate, but the facts are that 50% of people who are
in poverty in Scotland are disabled. You have a second large proportion
which are on "out of work" benefits who are lone parents
and we have had debates this afternoon about choice and whether
that should be the case. We have a large proportion of the "out
of work" benefit population who are there for very short
periods anyway and they go back into work very quickly; so what
you are actually coming down to is a relatively very small proportion
of the "out of work" benefit population, that you are
penalising the whole population for what is actually a small proportion.
It may look big in your constituency, but what I am saying is,
on a national basis, it is really not an issue. There is no way
necessarily that you would argue that someone who is out of work
needs the same level of income as someone who is in work, because,
for example, they can live cheaper, or whatever, but what I would
argue is that it does need to be much closer.
Q409 Mr Davidson:
I am not sure that the £55 figure is entirely a fair one,
because it does not take account of the council tax benefit and
the rent, and the rent and rates in Glasgow are amongst the highest
in the country, and therefore it is much more than simply the
£55 figure. I am not sure either that you have taken adequately
into account the impact of public support for a benefits system,
the extent to which we have got to take people with us in the
argument about raising benefit levels, if, at the same time, they
see the credibility of the system being undermined by people who
are abusing it?
Ms Middleton: The vast majority
of people in this country have no idea what the current level
of benefit is. If you went out, on those streets, and asked randomly
a number of people "What is the current benefit level for
a single person on Income Support or JSA?" I guarantee you,
you would get an answer that was about three times what it actually
is.
Q410 Chairman:
I have met many of my constituents who are on benefit, and they
tell me they cannot see any benefit from taking up a job, in fact,
perhaps they will lose out?
Ms Middleton: Are you telling
me that they are telling the truth?
Q411 Chairman:
I do not know, but that is what they are telling me.
Ms Middleton: That is a question
then for Jobcentre Plus in their "better off" calculations.
Q412 Chairman:
Yes; and, of course, Jobcentre Plus tell us "We calculate
the benefit for them and try to convince them."
Mr Palmer: One of the issues here
is the complexity of disability benefits, which is a whole other
subject. There are all sorts of different disability benefits
which potentially you can claim. One of the problems, I think,
with the system currently is that the amount of benefit you get
depends in part on how well you advocate yourself, or have an
advocate on your behalf. Certainly there are advisers out there
who guarantee that if you are disabled then they will be able
to raise your income quite considerably. I think one of the problems
with the current system is that those who do not advocate well
get left on quite low levels of benefit, and there are other people
who get quite high levels of benefits, not because their needs
are that different but because that is the way the process happens
to have worked. I think there is no doubt that the basic benefit
is very low. Incapacity Benefit is £55 a week, is it not;
that is for disabled people. I agree, there are all sorts of add-ons
you can get, if you know your way round the system.
Q413 Chairman:
Can I thank the witnesses for their attendance. Before I declare
the meeting closed, would either of you like to say something,
in conclusion, perhaps on issues which we not covered during our
questioning?
Ms Middleton: No. Just to thank
you very much for the invitation, I have enjoyed it very much,
and to ask you if you would like me to get the Foundation to send
you some more information about its dispersal of grants?
Chairman: Yes, that would be very helpful
for us, and we can assure you that your evidence will be extremely
useful for us when we compile our report. Thank you very much
for your attendance.
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