Attacks on Working People: Trade Union Bill and Tax Credit Cuts

This week has seen the Government push forward measures that attack working people and particularly those on the lowest incomes.

On Monday the Trade Union Bill was in Parliament for its Second Reading. This is yet another example of the Government’s failure to support working people, after the recent summer Budget that saw working people on the lowest incomes lose the most.

The Trade Union Bill is merely an attempt by the Government to stifle reasonable democratic scrutiny, protest and challenge. The Bill does nothing to tackle the pressing national challenge our public services, businesses and industries alike are facing; that of addressing Britain’s productivity gap and skills shortages.

Instead the Bill tries to drive a false wedge between government, industry, employees and the public by restricting rights – and at worst criminalising – ordinary working people, from midwives to factory workers to challenge low-pay or health and safety concerns.

All those who care about our democratic rights and an economy where business, employees and government work together for the mutual benefit should expose this Bill for what it is – a divisive piece of legislation which puts to bed any notion that the Government is taking a one nation approach.

After muzzling charities and restricting access to justice this is the latest attempt to silence critics of this Government and its policies. I opposed the Bill at Second Reading and was disappointed that Tory MPs blindly followed their Whips, as it was passed by just 33 votes. I will continue to oppose the Bill in its later parliamentary stages.

Tuesday saw the Government bring forward a Statutory Instrument (SI) which rolls out their tax credits cuts, as announced in the Summer Budget, from April 2016.

In Oldham East and Saddleworth, more than 20,000 working families with nearly 30,000 children are claiming tax credits. That is two in three families, and three in four children. For them, tax credits mean keeping their heads above water. The changes the Government pushed through on tax credits will be devastating for them and will undoubtedly result in an increase in child poverty, with a knock-on effect on those children’s educational attainment, health and life chances. The worsening inequalities are set to become intergenerational.

Tax credits in their current form were introduced by the previous Labour Government in 2003 with the aims of ‘tackling poverty’ and ‘making work pay’, particularly for single parents. There is substantial evidence that they have been successful in both those aims, and little evidence that tax credits have played any part in depressing wages.

In terms of the basic overview, the SI that was debated yesterday amounts to a cut of £4.4 billion in 2016-17, without an impact assessment. These changes introduce a work penalty into the tax credit system and weakens incentives for people find work or take on more hours.

According to the Institute for Fiscal Studies (IFS) these changes will see over 3 million families lose an average of £1,000 a year. The IFS have also confirmed that it is “arithmetically impossible” for the Government’s so called ‘National Living Wage’ to make up for these losses.

I want to see a higher wage economy where people are less reliant on tax credits to make ends meet, and action on low pay and high rents which are the real drivers of rising social security spending. These changes are simply not the answer as I have repeatedly stated in recent speeches in the House of Commons.

Indeed, in my speech on the Summer Budget I said:

“Another illusion is that the Budget is fair and will make work pay. We know from an analysis conducted by the independent Institute for Fiscal Studies that the poorest 20% of the population will lose proportionally more of their income from tax and benefit changes than any other income group—between £800 and £1,300 a year—and that 3 million people are set to lose £1,000.

“The increase in the national minimum wage is welcome, although it is not a living wage as the Government have tried to suggest. It is something, but it does not begin to compensate for the cuts in tax credits that will be suffered by the low-paid. Let me add to the examples that have already been given by many of my hon. Friends. The income of a lone parent with two children who works for 16 hours a week will increase by £400 a year, but that will be accompanied by a tax credit cut of £860, so that person will be £460 worse off. A couple with one partner working full-time on average income will lose £2,000 in tax credits, and will not benefit from the increase in the national minimum wage. According to data published by the International Monetary Fund last month, raising the income share of the poorest 20% of the population increases growth by 0.38% over five years. What the Government are doing will harm the chances of a sustained recovery.

“The Government are trying to persuade the public, and to justify what they are doing to working people. We know that, on the whole, it is working people who will be affected. Half the 13 million people who are living in poverty are in work, and two thirds of children in poverty are in working families. The Government are trying to construct a narrative to justify the tack that they have taken—the “divide and rule” narrative about people being feckless—but it is the working people who will be affected most.”

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