is Member of
Parliament for Preseli Pembrokeshire.
It was a sobering message: with wage support now focusing on
viable jobs, a further rise in unemployment is sadly now
inevitable. Many more families will face great uncertainty and
anxiety in the months ahead.
There are many pressing issues that our country will need to
overcome but, in my view, the Government must immediately focus
on preventing rising unemployment leading to a surge in poverty.
What was missing from the Chancellor’s statement was any mention
of the crucial role being played by Universal Credit during this
crisis and the bigger role it will inevitably need to play in the
months ahead.
Ministers rightly acknowledged at the start of the pandemic the
need to strengthen Universal Credit. The main rate of
unemployment support had fallen to its lowest level in real terms
since around 1990 and an uplift was an essential step in
providing an effective safety net for the storm that was fast
approaching.
The increase to the standard allowance Universal Credit and
Working Tax Credit of £20-a-week has served as a lifeline for
families who otherwise would have had to cut back on essentials,
fallen behind with bills or been forced into debt.
However, this support is due to be withdrawn next April unless
the Chancellor announces his intention to make it permanent. The
statement on the Winter Economic Plan was a good moment for such
an indication.
Withdrawing the uplift would reduce the spending power of people
on lowest incomes. This will likely reduce consumption, meaning
families going without essentials and household debts rising. It
would also see a reduction in spending just when the economy
needs it most.
In contrast, investing in social security can be an effective
stimulus, with those at the bottom end of the income distribution
allocating more of their budget to core bills and essentials, and
therefore being more likely to spend additional income than
wealthier households (who are more likely to save).
The concern over this upcoming overnight cut to incomes is shared
by a coalition of over 50 leading charities, bishops and other
organisations who earlier this week called on the Chancellor to
make the temporary increase to Universal Credit permanent.
The letter highlights recent analysis by the Joseph Rowntree
Foundation which warned that 16 million people are in
households facing an overnight income loss equivalent to £1,040
a year, and half a million of those already in poverty are at
risk of being plunged into deep poverty unless this support
remains in place.
Several committees in Parliament have already spotted the looming
cut and have flagged warnings to ministers about the need to
extend the uplift. The default Treasury position in these
situations, however, is to commit to nothing until absolutely
necessary – usually when Number 10 gets involved.
But we know how this will likely play out: Whitehall digs in.
Meanwhile constituents start to realise the change in their
circumstances that is coming. Backbenchers get spooked as the
emails come in. Opposition turn up the heat supported by a wide
range of voices outside Westminster. Whips step in to fix the
problem with Number 10. U-turn.
A better course of action is to spot the political problem on the
horizon and avoid it by having a clear plan. In this case the
Government has already done the hard work – it now just needs to
keep doing the right thing which is maintaining this vital
support.
Just over nine months ago, our party won the General Election on
a promise to deliver Brexit and level up the UK, improving the
living standards of parts of the UK that understandably felt
forgotten.
Many of us owe our seats to voters on low incomes, with the
Conservative Party now more popular among these groups than the
Labour Party. Unfortunately, it is precisely the areas of the UK
that were most in need of levelling up before Coronavirus that
are feeling the full force of the economic storm it unleashed.
To fulfil our promise, we will need to see investment in
infrastructure, housing, jobs, reskilling and education in these
parts of the UK, as set out in our manifesto and the recent
announcements from Government.
We must not shy away from our responsibility to tackle the root
causes of poverty. As more people lose their jobs, have their pay
cut and hours reduced, the numbers of people at risk of poverty
and debt will grow.
It is crucial that we have a social security system that people
can turn to when they hit hard times.
