SCVO Briefing - Welfare Reform and Work Bill

Introduction

Sadly, SCVO and other third sector organisations find themselves having to brief MPs on further, devastating changes to tax and benefits which will serve to push more people into poverty. Rather than achieving the goal of making work pay, the reforms outlined by the Chancellor on the 8 July will have the opposite effect.  The assumption that working families on low income and those who are out of work, facing disability or providing unpaid care are not aspirational or hope for better lives is completely flawed.  There is a determination here to continually stigmatise people in poverty and benefit claimants. Our briefing calls for MPs to use their conscience and consider the very likely effects of the provisions in this Bill.  Please, vote this Bill down and call for the UK Government to rethink its budget proposals.  They are economically, socially and morally flawed. Not all provisions in the Bill will affect Scotland directly but we comment on them because they reinforce the continued narrative which devalues fellow citizens because of their income or employment status.

Third sector responses

The third sector has been united in its condemnation of the provisions within the Bill which seek to cut social security and further unpick an already fragile safety net for working families and others who are unable to work or who provide billions of pounds of unpaid care. Housing, children’s, carers’ and other charities have all outlined the negative consequences of the tax and benefits provisions in the Bill and challenge the UK Government to rethink its proposals, particularly the £12 billion of cuts to social security. We highlight some of these critiques below and urge MPs to speak to key groups locally and nationally to understand their analyses of the Budget proposals, which mirror the concerns of esteemed economists and think tanks including the Resolution Foundation, and the Institute for Fiscal Studies, amongst others. Shelter Scotland highlighted “shameful” cuts to Housing Benefit for young people.  The charity commented: “This is a youth tax and a shameful decision which is unjustified and cruel. It completely removes the safety net that is in place to protect young people whose circumstances often prevent them from staying in or returning to the family home.” The Child Poverty Action Group pointed out that tax credit, Universal Credit and other proposals now contained within the Welfare Bill serve to “..damage the economic security of working families..” whilst commenting on the sleight of hand which pushed a higher minimum wage nullified by withdrawal of tax credit and Work Allowance support. Many low income families don’t even pay enough tax to benefit from the increase in the Personal Allowance. Carers UK campaigns for millions of unpaid carers who save public services and our economy hundreds of billions of pounds per year.  A welcome focus on better support for unpaid carers arising from the passage of the Care Act is fundamentally undermined by the Welfare Bill proposals. Carers UK emphasizes that the cap of £20,000 will affect thousands of families who provide unpaid care. The cut to Employment Support Allowance (WRAG) will also affect carers who may have to supplement the wider family income when this benefit is reduced to the level of Jobseekers’ Allowance. Barnardos Scotland accuses the UK Government of failing to protect children, whilst the cuts to Employment and Support Allowance (Work Related Activity Group) may push people who are considering work back into the ESA support group, as additional costs facing disabled jobseekers are not met, and support to help them move into work can be patchy. What is more, these cuts are likely to create further stress amongst disabled people across the country, highlighted in a recent research project carried out by Inclusion Scotland. Despite this united condemnation of last week’s budget, it is unlikely that the Chancellor or the UK Government will listen to our concerns.  It seems hell bent on further stigmatising people in poverty and creating greater and increasingly insurmountable barriers for individuals and families affected by the Bill proposals to get into work, or to progress into better work.  It continues to focus on paid work as the only way in which people are deemed to be of value – whilst devaluing other contributions to our economy in terms of care and volunteering.

Responding to Bill provisions

Full Employment (Clause 1)

The focus on achieving full employment (Clause 1) would be welcome but recovery predicated on low pay is not a recovery...our economy and labour market need to change.  Indeed the barriers which this Bill will seek to enact are likely to further trap people in poverty and a “low pay-no pay” cycle. The increase in the minimum wage may, on the face of it, be something which the third sector would welcome. Work should be a route out of poverty. However, the reality is this – the cuts to tax credits, and sharper tapers/withdrawal of the Work Allowance outweigh any benefit to families across the country. This budget does not support work or progression in work.

Troubled families/Stigma (Clause 3)

Initiatives to tackle so-called “troubled families” do not apply to Scotland but in this age of UK-wide, up to the minute media, the very term itself sends out a disturbing message. Continued stigmatisation of people in poverty is unacceptable. The troubled families’ initiative focuses on those with low incomes and those out of work. Ironically (and tragically) the UK Government is therefore increasing the number of families covered by this pejorative term, as a result of the provisions within this Bill.

Amending the Child Poverty Act (Clause 4 – A1A and Clause 6)

A secure income is vital in helping children to thrive. It ensures financial security, decent housing, food, clothes and how children are viewed in society. Low income and poverty can profoundly affect children’s life chances. To change poverty measures as planned tries to sweep the crime of child poverty under the carpet. This is unacceptable and belies the real challenges facing families across the UK. To focus on children in workless families (deliberately) ignores the existence of increasing in- work poverty.

Benefits Cap (Clause 7)

The benefits cap has not served to help people move into work, indeed, limiting people’s income to such an extent through a number of the cuts announced will mean that fighting to meet basic needs takes precedence over job-seeking. Rather than protecting people who are potentially vulnerable or face different life challenges, unpaid carers and their families may well be affected. At a time when our population is changing and care needs increase, yet again, families who fill the care gap are paying the price of failed economic policy. In 7(4) Carers Allowance – already the lowest of all income replacement benefits appears to have been included in the benefit cap. Given carers have to care for at least 35 hours per week to receive this, this can only be seen as a direct attack on a group of people who prop up strained health and care services.

Unpaid carers (Clause 7, 9, 10 etc.)

Pre-election leaks which suggested that changes to Carers’ Allowance may be on the cards have not yet been realised. However, the proposals announced in the Emergency Budget will affect unpaid carers – both those who balance work and care and those who provide intensive, round the clock support to loved ones. As cuts to social care continue across the country, the tax and benefit changes will add further stress to carers’ lives. An increase in the minimum wage will push more carers out of work as long as the earnings threshold within Carers’ Allowance continues to be set at such a low level. Finally it isn’t clear that Carers’ Allowance is excluded from the four year benefits freeze and sadly it appears to have been included in the benefit cap.)

Employment and Support Allowance (Clause 13)

This proposed cut to an important disability benefit is heartless at best. Like SAMH^[i], we challenge the UK Government’s “cynical and mendacious” claim that disabled people apply solely for ESA (WRAG) just to get an extra £30 per week.  This flies in the face of the Government’s claim that it is protecting disabled people. Research carried out by SAMH and many other charities has shown that disabled people have suffered directly as a result of previous benefits changes. This further cut will prove costly for disabled people, their families and for public services. Recovery from ill health and a return to work is more likely to be delayed by such a change^[ii].

Gender equality

Recent attempts by the UK Government to demonstrate gender equality credentials are disingenuous at best. The provisions of the Welfare Bill including cuts to Tax Credits will actively reduce the incomes of women, further cementing their unequal status in the labour market and within the economy. 70% of all projected cuts to 2020 will come from women across the UK.

Impact on Scotland Bill

As benefits to be devolved are included in the Welfare and Work Bill – e.g. Carers’ Allowance and Severe Disablement Allowance - we call on MP’s to halt the Welfare Bill’s progress to consider the effect on the Smith Commission proposals and the Scotland Bill, and the budgets likely to accompany newly devolved benefits.

Conclusion

The budget and this Bill have failed to do anything which will revitalise a still flagging economy. Economists such as Joseph Stiglitz have highlighted that people with lower incomes and those who are dependent on the state through no fault of their own continue to pay for a crash which was not of their making. Families in work, those who are disabled and unpaid carers continue to see their incomes reduced, and a continuing narrative of “poor bad, rich good” is being increasingly adopted – often unintentionally – by politicians who want to challenge these cuts. We cannot over-estimate how much more damage will be done to families who only strive for the best, but who are consistently deemed to be of less value or who are prevented from progressing because perverse policies on social security will work against the very outcomes the UK Government says it wants to achieve. The Bill is unlikely to make work pay, and may actually serve to move people away from the job market. We call on all MPs to vote with their conscience – please get as animated about this flawed legislation as you are about other policies. Vote this bill down and call on the UK government to rethink its plans.  Please stand up for those who are being pushed further into poverty.

Contact

Lynn Williams Policy Officer lynn.williams@scvo.scot 0141 559 5036/07771 666429 Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB Web: www.scvo.scot

About us

The Scottish Council for Voluntary Organisations (SCVO) is the national body representing the third sector.There are over 45,000 voluntary organisations in Scotland involving around 138,000 paid staff and approximately 1.3 million volunteers. The sector manages an income of £4.9 billion. SCVO works in partnership with the third sector in Scotland to advance our shared values and interests. We have over 1300 members who range from individuals and grassroots groups, to Scotland-wide organisations and intermediary bodies. As the only inclusive representative umbrella organisation for the sector SCVO:

• has the largest Scotland-wide membership from the sector – our 1300 members include charities, community groups, social enterprises and voluntary organisations of all shapes and sizes
• our governance and membership structures are democratic and accountable - with an elected board and policy committee from the sector, we are managed by the sector, for the sector
• brings together organisations and networks connecting across the whole of Scotland

SCVO works to support people to take voluntary action to help themselves and others, and to bring about social change. Our policy is determined by a policy committee elected by our members.[1]   Further details about SCVO can be found at www.scvo.scot.  

References

Scottish Voluntary Sector Statistics 2010, SCVO www.scvo.scot/evidencelibrary/Home/ReadResearchItem.aspx?f=asc&rid=1078 [1] SCVO’s Policy Committee has 24 members elected by SCVO’s member organisations who then co-opt up to eight more members primarily to reflect fields of interest which are not otherwise represented. It also includes two ex officio members, the SCVO Convener and Vice Convener. [i] SAMH – Briefing on Welfare and Work Bill, July 2015 [ii] As above.