DOING THE POOR IN CORNWALL…

…and others and elsewhere

The other day I wrote about the slow erosion of the minimum wage which for a dozen years has helped those at the bottom of the pay pile. The wage has been “the slow-foot hope of the poor”. As the budget provisions come into force there is more bad news for the vulnerable here.

Yes, any budget is complex with winners and losers and contending interpretations. In the 2012 budget there are very small tax reductions for a lot of taxpayers, but I think these are outmatched by significant losses for some poor, low-paid, and very modestly paid groups. For example, today the Tory Libdem government’s destructive change to working tax credits comes into force. A couple with children on less than about £17 000 a year at present can get the credit as a top up to their wages for working at least 16 hours a week. From today those qualifying hours are raised to 24: between them they must work 24 with one working at least 16 or one must work 24. There is a recession, jobs are hard to find, the opportunities for increasing hours extremely limited. If they fail the new hours test, the family will lose all the working tax credit, up to £74 a week. There are estimated to be around
200 000 couples affected by this change nationally and pro-rata that is nearly two thousand in Cornwall. These are working people and their families; they should be encouraged not find their lives made more difficult by deliberate government decision.

At the same time research by the Institute for Fiscal Studies (IFS) for the Labour party shows that a typical family will lose £511 a year due to 2012 Tory Libdem budget changes in taxes and benefits: this takes into account the vaunted increase in the income tax threshold. In April 2014 pensioners will be £315 a year worse off as the granny tax bites.

Here then are the fruits of Tories and Libdems working together to take from the poor and low paid. Cue overpaid politicians earnestly telling us how it pains them to have to take hard decisions to reduce lesser paid people’s income.

Do not expect the Conservatives or Libdems to mention these cuts.

ADDENDA

Read here why the government’s tax threshold change amounts to only 81p a week after accounting for the default inflation rise. (7 April 2012)

A survey by the Guardian shows that many jobs are not giving enough hours for people to meet the new qualifying hours rule for working tax benefits. This new rule is either serious incompetence by the Tory Libdem government or a callous policy change; it should be righted. (8 April 2012)

NOTE
“the slow-foot hope of the poor”: Robert TRESSELL Ragged trousered philanthropists chapter 45

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HOW CORNWALL PEERS AND MPs VOTED

This is a revision of the post How Cornwall peers voted to include the later votes of Cornwall MPs on what I see as five defining amendments to the Welfare Reform bill in the last few weeks.

The peers associated with Cornwall are: Tony Berkeley, Brenda Dean, and Paul Myners (all Labour); Judith Jolly, Matthew Taylor, Robin Teverson, and Paul Tyler (all Libdem). The MPs are George Eustice, Sheryll Murray, and Sarah Newton (all Conservative); Andrew George, Stephen Gilbert, and Dan Rogerson (all Libdem).

The successful Lords amendments were all voted down in the Commons; amendment 58d was lost in the Lords. I have put the votes in parties separated by a semicolon. I have put together the Lords votes for the amendments and the Commons votes to retain them as For/retain and the Lords votes against the amendments and the Commons votes to overturn them together as Against/overturn. The amendment numbers in the Lords were changed for the Commons.

Of the Cornwall representatives, Labour consistently voted for what I see as civilising amendments, The Tories consistently voted against them, and the seven Libdems voted mostly against them but some sometimes for them.

The first three amendments (Lords 36a, 38, and 38a) were to the rules for the length of receipt by groups of the contributory employment and support allowance (ESA). Lords amendments 58d, 59 were listing exemptions from the benefit cap. Lords amendment 1 was to ameliorate the proposed reduction in payment for the lower-rate disabled young people of about £1300 a year.

Amendment Lords 36a, Commons 15 (disabled young)
For/ retain: Berkeley, Myners; Taylor, George
Against/overturn: Jolly, Teverson, Tyler, Gilbert, Rogerson; Eustice, Murray, Newton

Amendment Lords 38, Commons 17 (two year period)
For/retain: Berkeley, Myners; George
Against/overturn: Jolly, Taylor, Teverson, Tyler, Gilbert, Rogerson; Eustice, Murray, Newton

Amendment Lords 38a, Commons 18(cancer patients)
For/retain: Berkeley
Against/overturn: Jolly, Teverson, Tyler, George, Gilbert, Rogerson; Eustice, Murray, Newton

Amendment Lords 58d (exemptions from the benefits cap for people who qualify as, or are because of the cap in danger of falling into, homelessness). As this amendment was lost in the Lords it was not voted on in the Commons.
For/retain: Berkeley, Dean, Myners; Taylor
Against/overturn: Jolly, Teverson, Tyler

Amendment Lords 59, Commons 47 (excludes child benefit from the cap)
For/retain: Berkeley, Dean, Myners; Taylor, Tyler
Against/overturn: Jolly, Teverson, Gilbert; Eustice, Murray, Newton

Amendment Lords 1, Commons 1 (ameliorate reduction)
For/retain: Berkeley
Against/overturn: Jolly, Teverson, Tyler, Gilbert, Rogerson; Eustice, Murray, Newton

The detailed wording of the amendments and the arguments around them and the voting records are in Hansard. Votes on Lords amendment 36a, 38, and 38a were on 11 January 2012, Lords amendments 58d and 59 on 23 January, and Lords amendment 1 on 31 January. The Commons votes were on 1 February.

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THE SHAME OF THE LIBDEMS

This was the Libdems’ most shameful day. Nothing else they have done since May 2010 matches this wrong.

On Wednesday the Liberal Democrat party sank. In two hours and three votes in Parliament it shredded any fragile claim to be a party of progress and reform and liberalism.

The House of Lords was debating primarily three amendments to the non-means-tested contributory Employment and Support Allowance (ESA) provisions in clause 51 of the Welfare Reform bill of the Tory Libdem government. You can read the debate and see the votes here (Lords Hansard 11 January 2012 column 152-176). ESA is the successor from October 2008 to invalidity benefit and income support on grounds of incapacity.

There is a need to reduce the deficit, to ensure services are efficient, and to spread the pain of reduction fairly across society with the broadest shoulders carrying the greatest load. None of that requires us to penalise those who are among the most vulnerable in our country, but that is what the unamended bill proposed.

Let me explain very briefly what is explained more fully in the Hansard record of the debate. The three amendments, 36a, 38, and 38a, sought to mitigate the pain for the vulnerable. They kept automatic contributory eligibility for ESA for people severely disabled or impaired from birth or from a young age, young people so severely disabled that they have never had, and will never have, the chance to earn a living, in the words of the independent crossbench peer Molly Meacher who moved the amendment (36a); they extended the time which someone who had worked and paid into the system could receive contributory ESA from one year to at least two years (38); they exempted cancer patients from the one-year ESA limit (38a). Under the unamended bill a cancer patient would have stopped receiving contributory ESA support after fifty two weeks and while perhaps still in treatment or recovering from treatment.

These amendments did not propose additional costs; they opposed cuts in present spending for the seriously disadvantaged. Saving money seemed to be the government’s main concern; but arguments about cost are always at bottom about priorities.

It was an impressive debate and several members made telling speeches which expertly explored the technical issues and laid bare human suffering. The civilising amendments were carried by large majorities by Labour and independent crossbench peers and with a number of Libdems that you can count literally on the fingers of one hand; the government was defeated. Tory and Libdem peers who voted did so in bulk against them. Some Libdem peers seem to have abstained.

This was the Libdems’ most shameful day. Nothing they have done since May 2010 matches this wrong. Remember this, remember this, remember this: the Libdems voted to cut financial support for very vulnerable people.

Notes

The House of Lords debated these issues in Grand Committee on 8 November 2011. Read the debate here. At times the real life examples given are searing.

The House of Commons debated clause 51 in committee last May. See here (Hansard 3 May 2011 column 628-656). The Commons gave the bill a third reading last June.

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CUTTING CORNWALL

Way back in 2009, before the general election, I explored the itch of the Tories to localise benefits and public sector pay, to end the setting of them at a largely uniform, national standard and to have them set them at local levels. Now it isn’t just the Tories of course; the Liberal Democrats are up to their elbows in this localisation too.

I returned to this topic over several posts and I have put links to them at the foot of this one.

Now the itch has grown. In his autumn statement George Osborne has said the Tory Libdem government will move to end national pay settlements and localise them and thus in places like Cornwall stifle increases. No, he didn’t say it like that. He talked of bringing public sector pay “in line with local labour markets,” how public sector pay could be made “more responsive to local labour markets,” and how “more local market-facing pay” (yes, really) could be introduced into the civil service. Read it in paragraph 1.110 in the autumn statement. Of course for higher paid people market-facing might mean more money but not for most people in the public sector.

What will be the actual result of the local-labour-market-facing localisation?

Let me restate the arguments about pay of my earlier posts. Cornishing public sector pay (and benefits) carries the risk of large disadvantages for many people in Cornwall. Cornwall is in general a low-pay county; average pay here is lower than in much of England (see the 2011 ASHE data.) Many people in Cornwall gain from national standards in wages. The levels of wages for people in the public services here, like nurses and teachers and civil servants, are set by national standards and comparisons and negotiations not by what happens in the local private sector. For example, Cornwall local private sector wages are not used as comparators to decide what to pay a teacher or tax inspector here. Localising their pay makes it vulnerable to local competitive impact, that is, lower pay here outside the public sector might draw down Cornwall public sector pay below national benchmarks.

Localisation would be a way for a Tory Libdem government to stifle longterm public sector pay and benefits in places like Cornwall, to cut us off from progressive increases elsewhere. I think the Tories-Libdems are coming to see localism as a way of cutting public expenditure. Local variations in public sector pay (and benefits and even the minimum wage) might seem reasonable. After all, local living costs do vary and market pay varies. However, the Tory Libdem approach appears not to be about topping up mandatory national payments in areas of high living costs or influencing private sector low pay upwards. In practice the localising of payments would be seized as an opportunity to cut back public sector pay costs. Even within Cornwall we might have a contentious post code pay and benefits lottery to reflect variations in housing costs and private sector pay in different parts of the county.

If this Tory Libdem market-facing localisation happens, and that is most likely, I think it will have a damaging effect on the living standards of many people in Cornwall already reeling from austerity. Let’s see what the parties and groups in Cornwall have to say.

ADDITAMENTUM 8 December 2011: The Guardian of 8 December 2011 has the localisation story.

Earlier posts

Tories eye benefits and wages in Cornwall 6 September 2009

Vote Tory today, cry tomorrow 1 February 2010

Tory-Libdems to localise NHS pay in Cornwall? 19 July 2010

Localising benefits 31 July 2010

And see this (‘£7,000 pay gap for Westcountry workers’ in Western Morning News 16 December 20110).

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CAPPING CORNWALL

One of the questions that I have often discussed on the blog is complexity in public policy and practice, especially about the redistribution of public spending across England and the claims of unfairness from Cornish nationalism (and some Liberal Democrats too).

Recently the Tory Libdem government said that benefits would be capped overall at £26 000 a year. It was unfair, it said, that some recipients were receiving more in benefits than the average wage. There were accounts in the rightwing newspapers, cited by the government, of recipients receiving very much more in housing benefit for example, though it turned out that they were very few in number.

An overall cap appears to be rough fairness. It means unemployed people on benefits do not have a seriously larger income than most comparable people in work; people on housing benefits are not living in houses unaffordable to people in work.

However, the Department for communities and local government (DCLG) has thought this through and done its sums and these have led to concerns that have been revealed in a DCLG letter that has become public (see at the foot of the post). The cap is likely to have three serious consequences.

First, the overall cap is likely to lead to more public money being spent than saved. The DCLG email said: “We think it likely the policy [of the cap] will generate a net cost”.

This is because DCLG calculations, as explained in the email, suggest that some people will lose benefit income and be unable to afford their rent and thus become homeless. Homelessness will increase by 40 000 (half from the cap and half from “other changes to housing benefit”). Housing the homeless will cost money.

Additionally, a serious adverse effect of the overall cap will be a shortfall in affordable houses because developers of affordable housing must be sure of being able to charge rents of up to 80 percent of the market rents. “the overall benefit cap will prevent them from doing so in many cases” because developers will see that people cannot afford to pay the rents. The DCLG goes on to say that around half of the planned 56 000 affordable houses for rent to be built by 2014/15 will not be and family homes will be most affected.

There is also a question of whether the government has been wholly upfront about the DCLG concerns.

It is difficult to assess the likely consequences of the cap in Cornwall. I think that rents in Cornwall may well mean that homelessness and a loss of new affordable houses due to the cap will not be serious issues here. I hope that’s so; we shall see.

Fairness is difficult. Unintended consequences befoul decisions which seemed straightforward when made as I noted in the Independent England post yesterday. The government should rethink and there are suggestions from it of unspecified transitional arrangements for the most difficult instances; that might not be enough.

You can read the DCLG letter here.

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SPOT THE DIFFERENCE: CORNWALL AND LONDON

Universal credit
Reform, changing things for the better, is often difficult. The Tory-Libdems are aiming to replace a plethora of benefits and credits with a universal credit. Most people think simplification of the welfare system is desirable but the changes have thrown up a problem. London Councils, an umbrella for thirty three local authorities in London and the police and fire authorities, commissioned research from the Centre for social and economic inclusion (CSEI) into the impact of the universal credit on Londoners to see whether the credit offered enough incentive to get out-of-work parents in London to look for work in the face of childcare, housing, and transport costs. The report, Making work pay in London under universal credit (June 2011), is accessible as a pdf from the London Councils website here.

Losing
The report suggests that many Londoners and people elsewhere in the country will lose considerable money as a result of the reform. For example, a lone parent outside London, working on the minimum wage and with two children, could be £4364 a year worse off in spending power than under the present arrangements. Working couples on median London pay with children could be worse off. As always, read the details of the make up of the figures. The Tory Libdem government says there will be transitional arrangements to make sure no one will be worse off at the start.

Of course, it isn’t just London, it’s Cornwall too.

The cost of childcare is a major element in working families’ budgets and the report sensibly suggests that the geographical variation in child care costs should be recognised in the universal credit. I have already looked critically at the impact of Tory Libdem plans for local housing benefit and how plans for social housing tenure might damage incentives to work or improve oneself.

Pro-Cornish agenda
Yes, getting to grips with all this welfare stuff is more demanding than waving a flag but for many people in Cornwall welfare support is very important in their daily lives. The local political parties should be scrutinising the proposed changes and explaining how they see their impact upon people in Cornwall and suggesting how any undue adverse impact can be avoided. As I’ve said before, this is the real pro-Cornish agenda.

Spot the difference
This shows a difference between Cornwall and London councils. In London the councils commission and publish research on the impact of a proposed welfare change on their citizens. In Cornwall the council sells silk ties. Is that comparison entirely a caricature?

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CORNWALL UNAFFORDABLE BY 2019 ?

I have explored in the post LHA recipients in Cornwall lose out the changes in the June 2010 Tory Libdem budget to the local housing allowance (LHA), the housing benefit for tenants in the private sector.

As part of those changes from October this year the percentile of local rents used to set LHA rates will be the 30th rather than the 50th as at present. Using local rents in the private sector to set rent support in the local housing benefit for private tenants means that the benefit received is linked to the rent to be paid. The Welfare Reform bill changes this by restricting the uprating of LHA rates from 2013/14 to increases in the Consumer Price Index (CPI). Over the last decade private rents have increased more than CPI inflation has. Thus from 2013/14 people will each year probably receive less of their housing costs and will eventually be unable to afford the rent.

Research for Shelter suggests that these changes will probably reduce the numbers of suitable affordable houses available for renting with local housing benefit.

Research also suggests that most of Cornwall will become unaffordable by 2019 to those seeking private rented accommodation with local housing benefit (download all data, the data for local authorities).

The areas where rents are increasing more slowly tend to be areas of more unemployment. Will people be forced from their homes in the unaffordable areas like Cornwall and migrate to more affordable areas where work is scarce?

Is this a sensible policy?

Is there any chance our Libdem Cornwall MPs will say it isn’t?

Note
For informed and considered views about housing see the blog of Alex Marsh, professor of public policy at Bristol University. His post Taxpayers and ‘the right to the city’: alternative narratives on cuts to housing benefit of 25 April 2011 looks inter alia at the Tory Libdem government’s LHA policy.
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LHA RECIPIENTS IN CORNWALL LOSE OUT

The department for work and pensions (DWP) has published an impact assessment of the changes to the local housing allowance (LHA) in different local authorities (for the local details scroll to the tables link at the very bottom of the DWP page). This is the housing benefit paid to people in private rented accommodation not council or housing association accommodation.

The LHA proposals in Labour’s March 2010 budget would have produced 4610 losers in 2011/12 in Cornwall, that is recipients whose LHA money would have been reduced. This was largely because of the removal of the £15 excess (see below).

Those proposals were variously kept, changed, and added to in the Tory Libdem budget of June 2010. In that budget there are 8450 LHA losers in 2011/12 in Cornwall. That’s an increase of 83 percent over Labour’s proposals.

The details are in table 3 and table 26 here again and payments are in adjoining tables 4 and 27 – scroll to the tables at the very bottom of the DWP page.

NOTES

There is an introduction to the changes here.

£15 excess
If a recipient found accommodation with a rent below what was allowed for in LHA, he could keep the first £15 of the difference. This was meant to encourage people to seek out accommodation with lower rents.

June 2010 budget: major LHA changes for effect in 2011/12
-Removing the £15 excess (proposed by Labour for 2011/12, confirmed by June budget)
-Imposing an absolute maximum cap on the amount of LHA payable for each size property (this replaces the March budget proposal to take the top 1 percent of national rents out of rent calculations for LHA)
-Using the 30th percentile as the benchmark for area market rents rather than the median (50th percentile)
-Limiting the maximum of the size bands to four-bedroom properties rather than five bedrooms
-An additional bedroom allowed for an overnight non-resident carer (an improvement to LHA provision)

-From 2013/14 LHA uprates will be based on the consumer prices index (CPI) not local rents.
-From 2013/14 LHA recipients of jobseekers allowance will lose ten percent of their LHA if they are unemployed for more than twelve months.
These are explained in the documents above.
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