Welfare Reform and Work Bill

Written evidence submitted by Unite (WRW 20)

This evidence is submitted by Unite the Union, the largest trade union in the UK with 1.5 million members across the private and public sectors. The union’s members work in a range of industries including manufacturing, financial services, transport, print, media, construction and local government, health, education and not for profit organisations. As part of the Community, Youth Worker and Not for Profit sector Unite represents workers in advice and support organisations such as Citizen Advice, Housing Associations, Shelter and many others.

In addition, Unite organises and supports peoples outside of employment through its Unite Community membership. Unite Community represents over 10,000 people who are active in campaigning in their local communities across the UK. A great deal of this campaigning has been focused on opposing local service closures, and tackling poverty. Unite therefore has a special interest and expertise not just in the field of employment, but also the impact of ‘welfare reform’ on those not in employment.

Executive Summary

· The Bill does not give a definition of full employment, nor does it require supplementary targets towards progressing towards equality of employment opportunities. The type of employment that is being created in our economy is a key issue, not just the amount. Unite wants to see the creation of decent work for all, not the continued creation of insecure, precarious, low paid work.

· Alongside commitments to full employment we need action to strengthen, not weaken, employment and trade union rights to ensure that full employment delivers a labour market that increases living standards and shares wealth, and does not trap people into poverty.

· The Bill creates a target for three million apprenticeships in England. Unite believes that the quality of apprenticeships is as important as the quantity – and the quality should not be sacrificed in pursing the quantity. There must be rigorous minimum criteria about what constitutes an apprenticeship, and the outcome should be a nationally recognised qualification. It should include the necessary underpinning technical knowledge and assessment of competence through colleges and work based learning in combination. There should be a fixed term of employment, with clear learning and career progression that brings lifelong benefit and employment opportunities to the learner, serving the wider interests of the economy and society – not just the narrow needs of a solitary employer.

· The Bill proposes to abolish the current four measures of poverty – relative, absolute, deprivation and persistent – which are income based, and the targets for their reduction. As the decisive factor in poverty is having an inadequate income this must remain central to the measure of poverty. The Bill proposes is to remove this.

· Deregulation in our labour market, weaker trade union and employment rights, have contributed to a rise in insecure, precarious work and low and stagnating wages. Work is now less of a route out of poverty. The government, with its erasure of current poverty measures, is trying to define the poverty experienced by low earning households out of existence – this is totally unacceptable.

· The introduction of the Benefit Cap severs the tie between the social security system and the meeting of need. The proposed new, lower level of cap also severs the link between benefit levels for an out of work household and the earnings of the rest of society. Benefits paid should be linked to need, built on the principle of solidarity. The benefit system should be comprehensive, universal and designed with the outcome of poverty elimination as central. Built on wider infrastructure investments, such as a large scale programme of building homes for social rent, and decent work for all, such a system is possible and achievable.

· The Bill freezes the main rates of most working age benefits. This directly impacts households who do not have an adequate household income through employment. To raise household incomes of low-earning working households we need an approach that increases wages and goes hand in hand with providing proper support from the social security system as part of tackling poverty in this country.

· Under the proposals to remove the work-related activity component in Employment and Support Allowance (ESA) for new claimants, people who have been assessed as not being currently capable of work will lose £29 a week because of these cuts. People in this situation and struggling to survive on benefits cannot afford this cut.

Clause 1 - Full Employment: reporting obligation

1. The Bill introduces a requirement on the Secretary of State to annually report on progress towards full employment. The TUC have campaigned for a number of years for all political parties to commit to such a policy, stating that "We do not want to return to the position in the early 1990s when, after more than a decade of mass employment, it was often claimed that full employment was no longer achievable" [1] . However, currently the Bill does not give a definition of full employment, nor does it require supplementary targets around progressing towards equality of employment opportunities. The type of employment that is being created in our economy is also a key issue.

2. The TUC policy is for progress towards a target employment rate of 80 percent, a target that would move the UK towards the upper rates of employment across OECD countries [2] . The TUC have noted that this is a challenging target – requiring an extra 2.5 million jobs to be created.

3. It is well documented that there is systematic discrimination in the labour market against particular groups of people. Rather than strengthening the mechanisms to tackle this discrimination we have seen the weakening and dismantling of key sections of the Equality Act – such as repealing employer obligations on third party harassment – and equality infrastructure such as the Equality and Human Rights Commission. The Runnymede Trust reported last year that inequality in the labour market for Black, Asian and Minority Ethnic people had increased over the past decade [3] . In March this year, House of Commons Library research found a 49 percent increase in the long term unemployment of young BAME workers [4] and the Runnymede Trust has further analysed that the 2015 Budget measures as a whole will have a "negative and disproportionate impact" on BAME people. In April 2015 the Public Interest Research Unit published joint research with Disabled People Against Cuts that indicated in the last four years there has been a deterioration in the workplace experiences and long-term job prospects of disabled workers [5] . Women continue to experience a detrimental pay gap of 19 percent, have lower overall employment rates and account for 74 percent [6] of all part time workers where there is a greater pay gap. Unite also has experience of older workers who have been made redundant from high skilled jobs and have been unable to find new jobs commensurate with their skills. This represents a loss of skills and knowledge from the labour market. Research by Anglia Ruskin University published in April added to the evidence that LGBT workers face discrimination, with lesbian and gay jobseekers less likely to be offered job interviews than heterosexual job applicants despite comparable skill levels [7] . Commitments to tackling inequality and systematic discrimination in the labour market so that all sections of society benefit from a target for full employment are needed. Yet as well as weakening our equality structures, the current Government is further eroding peoples’ employment and trade union rights and protections, particularly through the proposed legislation contained in the Trade Union Bill and ending the regulations that prevent employers replacing striking workers with agency workers.

4. It is crucial that in committing to full employment there is a concurrent commitment to decent work for all. Recent Bank of England analysis highlights that "… the changing composition of employment growth - including the mix of occupations, industries, ages and job tenures - could explain around one percentage point of the recent weakness in average annual earnings growth". This suggests that the rapid recovery in headline job creation has been skewed towards lower paid work. This corresponds with findings from a range of sources, including the Joseph Rowntree Foundation and from Unite’s experience that employment is increasingly less of a route out of poverty. There are 13 million people living in poverty in the UK and half of these people live in a household where someone is in employment [8] . This proportion has grown in recent years, with stagnant and real falls in average wages and the growth of insecure, precarious employment – of which ‘zero hours contracts’ are emblematic of these wider trends. Younger workers beginning their careers have been particularly hit, with the IFS reporting in January 2015 that "Between 2008 and 2014, there is a clear pattern across the age spectrum, with larger falls in earnings at younger ages" [9] .

5. Alongside commitments to full employment we need action to be taken to strengthen, not weaken employment and trade union rights to ensure that the full employment we create is a labour market that increases living standards and shares wealth, does not trap people into poverty, by creating decent work for all.

Clause 2 – Apprenticeships: reporting obligation

6. The Bill includes a commitment to three million apprenticeships in England by 2020. As part of moving towards all educational routes being open to all, and of being high quality, Unite strongly supports steps that place vocational education on an equal footing with academic qualifications. For this to happen there must be rigorous minimum criteria about what constitutes an apprenticeship. Unite believe that the term ‘apprenticeship’ is in danger of being de-valued in this country while the Government subsidises employers to finance the every day training requirements of young workers, whom utilise public funding under the label of an apprenticeship. The quality of apprenticeships is as important as the quantity – and the quality should not be sacrificed in the quest for quantity.

7. Unite believes the outcome of an apprenticeship should be a nationally recognised qualification. It should include the necessary underpinning technical knowledge and assessment of competence through colleges and work based learning in combination. There should be a fixed term of employment, with a robust Individual Learning Plan defining the learning pathways and requirements. Apprenticeships should have clear learning and career progression, reaching advanced and higher levels of learning and skills as in other countries. Historically apprenticeships were served over a five year duration or longer. These timeframes will be different for individual learners and occupations (mature learners with recognition of prior learning may progress more quickly for instance). However, in the majority of cases, with advanced (level 3) and higher (level 4) apprenticeships, it is the experience of Unite, our members, the employers and the industries that we deal with, that a high quality industry recognised programme should span at least three years, and in the main will typically be a four year programme. At the end of an apprenticeship a learner should have achieved a nationally recognised qualification in a recognised occupation, and there should be a guaranteed job at the end of the apprenticeship. An apprenticeship should bring lifelong benefit and employment opportunities to the learner, serving the wider interests of the economy and society – not just the narrow needs of a solitary employer. Unite believes that apprentices should ‘earn while they learn’, they should be part of national collective bargaining arrangements and agreements, and paid accordingly.

8. Trade unions have an important role to play in this agenda and the development of apprenticeship schemes, for example trade unions have been part of the Sector Skills Councils and have worked closely with them to promote good quality apprenticeships, such as those provided through the Technical Apprenticeship Service (TAS). Sector Skills Councils should be strengthened and be linked to wider national collective bargaining arrangements. The TUC and individual trade unions have worked with apprenticeship organisations, employers and government departments on tackling inequality in access to apprenticeships and breaking down the occupational segregation that contributes to unequal pay. The Unite Board member of the UK Commission for Employment and Skills is the Commissioner Lead for a UK Futures Programme competition looking at job design and how this impacts on pay levels and career progression, with job design contributing to the ‘trap’ where mainly female low paid workers remain in low paid jobs over many years – a contributing factor to the UK’s gender pay gap."

9. Investment in apprenticeships must also not be at the expense of wider further education – a sector that is seeing its funding fall by a quarter next year, with repeated warnings that it is on the verge of collapse [10] . Unite believes that all educational routes should be open to all young people. This should be supplemented by a supportive, independent careers service which includes face-to-face interviews with young people and discusses all possible options with them.

Clauses 4, 5 and 6 – Deletion of Child Poverty measures and other amendments to the Child Poverty Act 2010

10. The Bill proposes to replace the current four measures of poverty – relative, absolute, deprivation and persistent – which are income based, and the targets for their reduction by 2020. The decisive factor in poverty is an inadequate income and therefore should be central to its measure. The Bill replaces the current measures of poverty with measures of ‘workless’ households and educational attainment. These are not measures of poverty; they are measures of other issues which have some correlation with poverty.

11. As highlighted in paragraph 4 above, half of all people in poverty live in households where someone works. In addition, the Child Poverty Action Group, drawing on Households Below Average Income data from 1994- 2014 have stated that "Measurements that conflate poverty and worklessness risk absurdity. Work is increasingly less of a route out of poverty. Sixty-four percent of children are in working households (compared with 55 percent in 2009/10), and to remove those children out of the new measures is to define their poverty out of existence" [11] . Unite strongly agrees with this statement. Where there is a child in poverty, there is a carer(s) also living in poverty. In July 2015, it was reported that nearly a third of parents with incomes less than £25,000 reported they skipped a meal to ensure their children do not go hungry during the summer holidays. This built on similar research by the Trussell Trust in 2014 that one in five parents struggled to feed their children over the summer holidays. This is clearly people experiencing poverty, many of whom will be in low paid, insecure or precarious work. It is unacceptable that they will not be recognised in future measurements.

12. The current four measurements of poverty should remain in legislation as reporting requirements on the Secretary of State, as they recognise inadequate income as the decisive factor in poverty and therefore cover all of those who experience poverty.

Clauses 7 and 8 – Benefit Cap

13. The introduction of the Benefit Cap severs the tie between the social security system and the meeting of need. The proposed new, lower level of cap (£20,000 outside of London and £23,000 in London) also severs the link between benefit levels and the earnings in the rest of society [12] . It will disproportionately impact on larger families living in London and the South, making whole swathes of the country unaffordable to live in. Over 200,000 children and over 80,000 adults have already been impacted upon, with the majority of households being lone parent households.

14. The level of benefits paid should be linked to need. The principle of solidarity – that the benefit system is comprehensive, universal and is designed with the outcome of poverty elimination – must be central. As stated above, the focus of our language and action must be on achieving full employment and a labour market that increases living standards and shares wealth, not traps people in poverty. We should not focus on making cruel and punitive cuts against those who need support – all of us are likely to need to call upon the support of the State at some point in our lives.

Clauses 9, 10, 11 and 12 – Freezing of benefits and tax credits, changes to child tax credit and child element of Universal Credit

15. The Bill freezes the main rates of most working age benefits. This directly impacts households who do not have an adequate household income through employment. The approach taken by this Government so far has been to oversee the growth of new jobs in lower paid sectors of the economy, and to cut in-work benefit support. To raise the household incomes of low-earning working households we need an approach that increases wages hand in hand with providing proper support from the social security system as part of tackling poverty levels in this country. The TUC study Raising incomes for low-paid families concluded that "while it is vital for the earnings of low-paid households to rise, a more generous system of in-work benefits is also urgently needed" [13] .

16. The Bill implements approximately 70 percent of the £12 -13 billion in ‘welfare savings’ identified in the Summer Budget. At the same time the government announced a new National Minimum Wage (NMW) rate for those aged over 25 years, which it is misrepresenting by calling it a ‘National Living Wage’ (NLW). The patterns of losses and gains from the totality of government actions announced in the Budget play out differently across different household types. The Resolution Foundation have illustrated this with a couple of different examples; a single person working full time on the current NMW will be better off by more than £2,000 by 2020. But a couple with three children, both earning the NMW with one full time and the other part time could be £250 worse off. Those who are low paid, but are just above the new ‘NLW’ could be severely hit – a single parent with one child and working part time could see their annual income fall by £1,000.

17. The Resolution Foundation’s Gavin Kelly summarised the impact as "…the boost to pay and the cuts to in-work support don’t balance out. A £4bn boost to pay cannot match a £12bn cut to benefits. Millions of working families will lose and many on tax credits now face a punishing 80% marginal tax rate. Don’t let anyone tell you the budget was "pro-work"" [14] . Such is the cuts to benefits for example, the actual London Living Wage would need to increase to £11.65 an hour to make up the difference and to approximately £10.15 outside of London. As the Women’s Budget Group has also noted "…the main problem is that 60% of jobs paid at minimum wage are actually part-time (two thirds of which held by women), and for them the wage system cannot offset the cuts in benefits" [15] . The IFS estimate that the increase in the withdrawal rate of tax credits and the reduction in work allowances and thresholds (accounting for more than half of the total cut) will affect three million families, who are set to lose about £1,000 a year on average, before any change in wages is taken into account. This has been supplemented by analysis published by the Joseph Rowntree Foundation that "…most working families will be net losers. In particular, a big shortfall between income and need will open up for many working lone parents. Furthermore, should costs rise faster than forecast inflation, disposable income will be further eroded for all households receiving working-age benefits. Overall, families relying on state help will find it hard to gain from economic growth, particularly if living costs start to rise again. Without a link between state support and rising prices, inflation is likely to erode or eliminate gains from wage rises" [16] . To repeat, to help low earning households you need to boost wages and provide a boost to our social security system, not implement the real cuts that are contained in this Bill.

Clause 13 – Employment and support allowance: work-related activity component

18. The Bill removes the work-related activity component in Employment and Support Allowance for new claimants. People – who have been assessed as not being currently capable of work - will lose £29 a week as a result of these cuts. The assessment of people in this group– which for many disabled people has been a humiliating experience – is that there is an expectation they may be capable of work at some point, but this may not be for some time. People in this situation and struggling to survive on benefits cannot afford to lose another £29 a week, and this cut and the attendant stress and impact on the ability to heat homes and to eat properly is likely to have the perverse impact that it makes people less capable of employed work in the future. The Bill also makes the equivalent changes to Universal Credit under Clause 14. These changes should not be made.

19. The experience of Unite Community members has been that the benefit system changes introduced under this government have been punitive, and effectively using the threat of hunger against people through the use of sanctioning of claimants. Applying sanctions that deny people financial assistance is cruel and often levied in a totally disproportionate manner.

Clause 14 -Universal Credit: work related requirements

20. The Bill includes measures that lower the age of the youngest child that a carer is expected to begin work related activity at. Unite would echo the criticisms voiced by Child Poverty Action Group that these measures make no provision for suitable childcare arrangements – there is no government policy on childcare support being put in place for those seeking work, just those in work, and even then the 30 hours free childcare only applies in England. Yet presumably if ‘work related requirements’ are not met then sanctions will be applied. There are additionally serious concerns that parents will be forced into inappropriate work that is incompatible or sustainable with their caring responsibilities. This is particularly the case when we are seeing an increase in short term, insecure and precarious work that is low paid and a further weakening of trade union and employment rights.

September 2015


[1] TUC, The Welfare Reform and Work Bill: A TUC Briefing, July 2015, page 2

[2] When data was accessed on 7th September 2015 the highest employment levels in the OECD were Iceland (81%) and Switzerland (79%).

[3] Britain’s hidden racism: workplace inequality has grown over the last decade, The Independent reporting research from the Runnymede Trust, 3rd December 2014

[4] 50% rise in long term unemployment for young BME people in UK, The Guardian, 10th March 2015

[5] PIRU and DPAC, Impact of Coalition government on disabled workers – workplace experience and job quality, April 2015

[6] Latest ONS Labour Market Statistics, August 2015

[7] Discrimination of gay and lesbian jobseekers ‘common place’, HR Magazine, 9th April 2015

[8] Joseph Rowntree Foundation, Monitoring Poverty and Social Exclusion 2014, November 2014, page 7

[9] Youngest workers hit hardest by wages slump of post-crash Britain, The Guardian reporting IFS research, January 2015

[10] Association of Colleges warn that "Adult education in England "will not exist by 2020" if government cuts continue", 25th March 2015 and National Audit Office, ‘Meltdown’ warning in FE college finances, 20th July 2015

[11] CPAG, Welfare Reform and Work Bill, Commons Second Reading Briefing, 21st July 2015

[12] As has been frequently pointed out, the current rationale behind the benefit cap confuses the income of out-of-work families with the earnings of an in-work family, who would additionally receive further in-work benefits on top of their earnings.

[13] TUC, Raising incomes for low-paid families, February 2014

[14] Gavin Kelly, Raising low pay is welcome. But we should still fear the forces hurting family incomes, 12th July 2015

[15] Women’s Budget Group, The impact on Women of July 2015 Budget, http://wbg.org.uk/wp-content/uploads/2015/04/July-budget-briefing-2015-WBG.pdf

[16] Will the summer 2015 Budget improve living standards in 2020? Donald Hirsch, 7th September 2015

Prepared 11th September 2015