Welfare Reform and Work Bill Committee

Written evidence submitted by PCS Union (WRW 52)

Submission on Welfare Reform and Work Bill

Introduction

1. PCS Union represents around 210,000 members in the civil service and related agencies, bodies and contractors. Within this, we represent 54,000 members based in the Department for Work and Pensions (DWP). Our members, working in a range of roles across the DWP, therefore have a unique insight into the likely impact of changes to the welfare system.

2. PCS believes that it is fundamentally wrong to try to tackle the budget deficit primarily by removing money from the poorest in society as this bill sets out to do.

3. PCS supports and endorses the comments that have already been submitted by the TUC and Unite. However, there are further key points that PCS would like to stress.

Changes to Tax Credits and Universal Credit

4. Reducing the value of in-work benefits by freezing increases and reducing income thresholds will not just increase poverty among the working poor, it will also make it harder to achieve the government’s purported aim of making work pay as it will remove a key incentive for people to take on low paid work.

5. Many PCS members are also low paid and rely on tax credits to ensure they have enough money to live on. DWP, for example, has said that as many as 40% of its own staff, staff represented by PCS, are reliant on in-work benefits. The proposed reduction to the thresholds for tax credits and Universal Credit will therefore directly impact many of the staff responsible for administering these benefits.

6. This reduction of income from tax credits is compounded by the 1% pay cap on public sector pay rises. This demonstrates how the government’s aim of moving to a ‘high wage economy’ is completely contradicted by its own policies. The Institute for Fiscal Studies (IFS) also outlines how most low paid workers will be worse off overall as a result of changes to tax credits, to quote Paul Johnson, Director of the IFS [1] :

"the key fact is that the increase in the minimum wage simply cannot provide full compensation for the majority of losses that will be experienced by tax credit recipients. That is just arithmetically impossible."

Child poverty

7. The changes proposed in the bill to how child poverty is measured are of particular concern. By removing the established measures of child poverty (both relative and absolute income), we fear the government will be unable to accurately measure child poverty at a crucial time.

8. This is of particular importance as many measures included in this bill represent cuts to specific benefits paid for children, such as child tax credits and universal credit, while other benefits cuts, such as lowering the benefits cap, have a disproportionate impact on children.

9. The measures proposed in the bill also come on top of a range of changes made in the last parliament which contributed to child poverty. Of those impacted by the current benefits cap of £26,000, a shocking 72% of these, over 200,000, are children [2] . Lowering the benefit cap can only plunge further families, and children, into poverty.

10. PCS also has knowledge of other examples of policies which are exacerbating child poverty. For example, the introduction of charging for using the child maintenance service, by the government’s own estimation, will see 100,000 families stop receiving vital maintenance [3] .

11. The myriad of different cuts affecting children cannot be looked at in isolation; this is why a comprehensive measure of poverty is needed. To attempt to measure child poverty by ‘worklessness’ or ‘educational attainment’ is to use indicators, not measures, of poverty which can only hint at the wider picture. PCS is deeply concerned that an increase in child poverty as a result of measures in this bill, cuts to public services and previous changes to welfare provision will now be hidden from public scrutiny. The Children’s Commissioner for Wales further backs up this point [4] :

"Welfare cuts have affected families with children more than any other group. Alongside this there have been cuts to many of the services children rely on to make their lives better like youth services, play and leisure facilities, libraries and out of school activities."

"The UK Government has announced that it intends to stop measuring child poverty in relation to income and instead will use measures of worklessness, education, and behavioural issues like those used in the English Troubled Families programme."

"This fails to acknowledge that the majority of children living in poverty have at least one parent who is working. Low pay, insecure hours and the costs of childcare, rent, heating and healthy food make life an everyday struggle for many families. Tax credits provide a crucial difference for thousands of families in low-paid employment. The UK, devolved and local governments should also be pushing more employers to pay a living wage."

12. With child poverty projected to rise and 600,000 more children expected to be living in poverty by 2016 [5] , the government should scrap the regressive changes to benefits which will impact disproportionately on children and should retain the current measures of child poverty in order to be held accountable to reducing child poverty.

Conclusion

13. IFS summarises the changes proposed in this bill [6] :

"Given the array of benefit cuts it is not surprising that the changes overall are regressive – taking much more from poorer households than richer ones"

A bill that makes life worse for the poorest in society is an appalling step in the wrong direction. Not only will this bill increase poverty but it will also have a disproportionate impact on children and will exacerbate the growing number of the working poor.

October 2015

Prepared 14th October 2015