New analysis by Labour reveals that Chancellor Rishi Sunak will hit every key worker earning over £18,000 in England with a real-terms pay cut next year.
This includes 52,267 key workers in the North East region – the teachers, police officers and Armed Forces personnel on the front line of the battle against Covid-19.
At the Spending Review on 25 November, the Chancellor announced a ‘pay freeze’ for all public sector workers earning above £24,000 in 2021-22.
NHS workers weren’t included, while those earning less than £24,000 were promised “a fixed increase of £250”.
Taking into account inflation over the next fiscal year, that means every non-NHS public sector worker earning over £18,000 will actually get a real-terms pay cut.
In the North East this includes:
• 5,691 police officers
• 23,471 teachers
• 22,035 civil servants, including tax inspectors, prison officers and probation officers
• 1,070 members of the Armed Forces
That’s a pay cut for every police officer in England, all 501,000 teachers in English state-funded schools and over 90% of the Armed Forces personnel based in England.
On top of the pay freeze, the Spending Review also contained a one-billion-pound council tax bombshell hidden in the small print and a cut to Universal Credit that will hit those who can least afford it.
Labour has condemned this triple hammer blow to people’s pockets as totally irresponsible when the economy is so fragile.
Making people worried about making ends meet will pull spending out of local high streets and small businesses, damaging consumer confidence at the very moment the Government should be building it up.
Sharon Hodgson MP said:
“The Chancellor was happy to clap for our key workers on his front step on Downing Street, but now that push has come to shove he has failed to show them the respect they deserve. Clapping doesn’t pay the bills.
“I believe those who serve our country deserve fair reward; by cutting their real-terms pay, the Government are punishing those who serve our country every day.
“The country needs a plan to recover jobs and rebuild businesses to fight the wave of unemployment. The Chancellor must think again.”
Shadow Chancellor Anneliese Dodds said:
“Key workers kept our country going this year, but the Chancellor has rewarded over a million of them with a real-terms pay cut.
“It’s totally irresponsible to hit workers in their pockets when the economy is so weak, but the least the Chancellor can do is be upfront about it.
“Instead, he’s trying to pull the wool over the eyes of the police officers, teachers and Armed Forces personnel who’ve kept the country going during this pandemic.
“They shouldn’t have to carry the can for this Government’s mistakes.”
You can read Sharon's latest Sunderland Echo column below or on the Sunderland Echo website.
As the Government places Northern regions under experimental lockdown measures, without the financial backing to help them through, the North-South divide has never been so apparent.
But as people in our region know all too well, Tory neglect of the North predates Covid-19.
Local Authority budgets in our region have been savaged since 2010, exacerbating long-term regional inequalities between the North and South.
Shocking statistics from the End Child Poverty Coalition show that some of the largest increases in child poverty have come from Northern towns and cities, with the North East seeing the largest jump of any region in England.
In my constituency, 35% of children are growing up in poverty, an almost 9% increase since 2014/15.
This is before we even take into consideration the consequences of Covid-19, which has left the North East facing economic turmoil not seen since the days of Thatcher.
Families face significant economic uncertainty, and need reassurance that support will be there to help them care for their children and stop them from slipping into poverty.
However, the Government is threatening to slash the safety net even further, by scrapping the £20 uplift to Universal Credit in April, which will only make it harder to make ends meet and plunge our children into further hardship.
Tackling poverty and addressing its root causes needs to be at the heart of any Covid recovery plan, to ensure this pandemic does not commit a future generation to a life of deprivation.
The Government must urgently reform the social security net, and retain the £20 uplift in Universal Credit (UC) and apply this to other legacy benefits.
In the face of already unacceptable levels of child poverty, our country’s children are now at severe risk of being swept even deeper into deprivation. Reforming UC and maintaining the £20 uplift would put much-needed cash into the pockets of Britain’s poorest families, helping them through this crisis, and would put us back on path to a fairer, more just society in the aftermath of this pandemic.
As the Chair of the All-Party Parliamentary Group on School Food, Sharon spoke in a debate on the Government's proposals to introduce a £7,400 net income threshold for families on Universal Credit and eligibility for free school meals. In her speech, Sharon raised concerns that the threshold would see over 1 million children in poverty miss out on a free school meal.
You can read the full debate here: Universal Credit and Free School Meals
You can read Sharon's full speech below:
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab):
These regulations will affect millions of families up and down the country, so it is only right that we are able to discuss them today. The Government consulted from November to January on introducing an earnings threshold that would restrict free school meals to families with net earnings under £7,400 per annum. The consultation received 8,981 responses. However, the Government excluded 8,421 of those responses from their analysis, meaning that fewer than 4% of respondents agreed with the Government. Surely that goes against every rule of public consultations. Talk about statistics being used against vulnerable people!
In 2010, the then Secretary of State for Work and Pensions promised in the White Paper on universal credit that it would
“ensure that work always pays and is seen to pay. Universal Credit will mean that people will be consistently and transparently better off for each hour they work and every pound they earn.”
Stephen Timms (East Ham) (Lab):
I am glad that my hon. Friend has picked out that point. She will have heard the Secretary of State saying that jobcentres would advise people not to take extra work or to get a pay rise because they would end up worse off. Is that not absolutely contrary to the whole principle of universal credit that she has just read out?
Yes, absolutely. We know that the Government are today reneging on the former Secretary of State’s commitment.
Free school meals are worth far more to a family than £400 a year per child. That might not seem to be a lot to some hon. Members, but to those families it is an absolute lifeline. By introducing a £7,400 threshold for eligibility, the Government are forcibly creating a cliff edge that will be detrimental to families, especially children. To give just one example, someone with three children in their family who earns just below the £7,400 threshold is set to lose out on £1,200-worth of free school meals if they work only a few extra hours or get a pay rise. The Opposition’s proposal would simply remove the huge cliff edge and the work disincentive for families who most need support. It would take away the barrier to working extra hours or seeking promotion. Our proposals would therefore make work pay. The Government’s proposal is in fact the new 16 hours, which they said was a disincentive.
Mike Hill (Harlepool) (Lab):
Is my hon. Friend aware that in Hartlepool, where universal credit is not being rolled out—it is already in—more than 1,000 children are being denied free school meals on the basis of the new proposal?
Yes. We can all cite the numbers from our constituencies. Even Conservative Members need to think about what they are doing to some of the poorest children in their constituencies. In the example I just quoted, the family’s annual wages would need to increase from £7,400 to almost £11,000 to make up for what they would lose by rising above the eligibility cliff edge. That problem did not occur under the old tax credit system, because that provided an offsetting income boost at the point at which free school meals were withdrawn. However, there is no equivalent mitigation under universal credit.
The Children’s Society has been much maligned today and has been cited as giving duff statistics—Conservative Members should be ashamed of themselves. It estimates that the cliff edge will mean that a million children in poverty will miss out on free school meals once universal credit is fully rolled out. They will miss out on something that is crucial for their physical and mental development.
The Government have said that 50,000 more children will benefit by the end of the roll-out in 2022, when the transitional protections are at capacity, but I and many others struggle to understand how that can be the case. Parliamentary questions tabled by my hon. Friends and others have gone unanswered, and the Government cannot just pluck figures out of the air, as they claim so many others have done. At least we can back up our claims with evidence from the Children’s Society, Gingerbread, the Child Poverty Action Group and Citizens Advice, all of which agree that this statutory instrument would take free school meals away from a million future children—[Interruption.] It would. If the SI does not come into force, a million more children will receive free school meals—[Interruption.] Conservative Members can shake their heads all they like.
During my recent Westminster Hall debate, I offered Ministers a solution that would mean that all children in universal credit households would continue to receive free school meals. As somebody asked earlier, I can say that it would cost half a billion pounds—not a huge cost to feed over a million of the poorest children. My proposal would see around 1.1 million more children in years 3 and above from low-income families receiving free school meals compared with under this change.
Heidi Allen (South Cambridgeshire) (Con):
If we were to maintain free school meals for absolutely everybody on universal credit, does the hon. Lady think it would be right to prioritise those coming from the legacy tax credit system, who could be earning up to £50,000 a year, instead of opening up eligibility and getting free school meals to more children in poverty?
I am running out of time, so— [Interruption.] Perhaps Conservative Members would let me finish before they use up all my time. I was going to say that while I cannot go into the full details, because of the time, I understand from the Children’s Society that that is a small number of people—up to 40,000—and that those people are often in large families with severely disabled children. The large amount of money is down to how much they receive for those children. It is disingenuous to use that as an example and to make out that all those families are receiving £50,000.
The Minister claimed yesterday that my proposal would result in around half of all pupils becoming eligible, increasing the figure to 3.3 severely million children. Even the much-cited Channel 4 FactCheck article states that our proposal would extend to 1.1 million children, making the total 1.8 million children. When we talk about facts, Conservative Members need to get their facts right. Where do the extra 1.5 million children come from?
Read Sharon's latest Sunderland Echo column below or on the Sunderland Echo website.
There are a lot of issues going on in Parliament at the moment, but one of the biggest is the serious flaws around Universal Credit – the Tories’ flag-ship reforms to the welfare system.
Labour support the original proposal of Universal Credit and making the system simpler, yet, the reality has led to serious concerns about how the system is working.
It has been estimated that where Universal Credit is in operation that one in four new claims are not meeting the six-week payment period, which is driving up debt, arrears and in some cases, evictions.
This is backed by 42% of families who are on Universal Credit saying that they are only in arrears because of the flaws of the system; from waiting times to receive their payments, support being delayed or stopped or administrative errors in the system.
Even in Newcastle where this policy is being trialled, a report by the council has shown serious problems emerge, including £1.2 million rise in rent arrears and the Leader of the Council saying that Universal Credit is returning the city to the days of Cathy Come Home.
The evidence stacks up and shows just how flawed this policy is.
This is even more concerning when the Government have begun to push ahead with their roll-out of these plans, which has seen a rapid increase in the number of Jobcentres brought under the programme to 50 a month – Sunderland will start using Universal Credit for all claimants in May 2018.
This is why last week the Labour Party forced a vote to pause and fix Universal Credit to ensure that it doesn’t push more and more people into poverty and sticks to its original intentions to support people when they face hardship and help them back into work.
Unfortunately, when it came to voting on this issue the Tories couldn’t be bothered to show up and instead abstained on the vote; ignoring the many campaigners who are concerned about this policy and their constituents who will be suffering under this badly-developed policy.
It is time that the Tories pulled their heads out of the sand and realise just how serious this issue is becoming and fix it before more people are pushed into poverty.
Sharon Hodgson MP's report - Nov-Dec 2016 number 90