Aimless Austerity Risks a Generation

 

Former Secretary of State for Wales Peter Hain has today condemned the Tory-Lib Dem government after economic data from the Office for National Statistics indicated that real-wages have fallen for the seventh consecutive year.

His comments came after the Bank of England slashed its growth forecasts for the British economy as the debate about the health of the economy continues to rage on.

The MP for Neath said: “We’re seeing a lot of news about this being a “surprise” to some, if the Chancellor had listened to the shadow cabinet it would not be. My own research indicates that in Neath people are close to being £3,000 worse off than they were in 2008 because of the erosion of real-wages by inflation and austerity.”

He continued, “frankly I think we’re approaching a watershed in our society because the Chancellor refuses to accept his long-term economic plan is long-term economic pain to most people. A recent report released by the Children’s Society and Step Change revealed on Tuesday that there are tens of thousands of children in Welsh families trapped in the debt spiral.”

“One of my proudest achievements was to be a member of the last Labour government where we saw the number of children in poverty reduced by 800,000. The latest figures from the Institute of Fiscal Studies shows that under this government that number will have increased by 300,000 by next year.”

The report from Step Change and the Children’s Society built upon research done by the Rowntree Foundation conclusively showing that that almost one quarter of Welsh families were trapped in poverty, this estimated to effect 148,059 children in Wales.

Mr Hain said: “the writing is on the wall, the Welsh Government is fighting an uphill battle against austerity. So long as the Chancellor continues to push this austerity agenda Welsh families will suffer as we are consistently forced to bear the brunt of unfair policy, this risks the welfare of a generation of young people in Wales, it is tragic.”

-ENDS –

Personal Independence Payments (Wales)

Mr Peter Hain (Neath) (Lab): It is a pleasure to serve under your chairmanship, Mr Owen. I apologise at the outset for having to leave immediately after I finish speaking, to undertake an official appointment relating to my duties as a former Secretary of State for Northern Ireland. I will not hear the Minister’s reply, but I will of course read it.

In the short time since personal independence payments have come into force, it has quickly become evident that the system is miserably failing people and leaving some of the most vulnerable in our communities in absolute desperation. My Neath constituency has one of the highest rates of take-up of the old disability living allowance, a legacy of the industrial heritage that once provided livelihoods for many of my constituents, but has now resulted in serious health problems—a heavy price to pay.

New applicants face a system of delay and despair. Many constituents have been waiting six months or longer, having had their face-to-face assessments and been told, frustratingly, that

“the report is in the final stages with a senior healthcare professional.”

For those six months they have been living off savings to help them to adapt to their conditions. The prospect of a backdated payment is of no comfort to them as they struggle with day-to-day tasks that many of us take for granted, while their families suffer under the stress and strain of caring for them.

In some of the cases processed by Capita, health care reports have not been up to standard and further information has been required. That involved going back to the assessor and requesting further information. In one case, a second face-to-face assessment was required, and in one astonishing instance it came to light in March 2014 that despite the assessment being carried out in November 2013, no assessment report had been prepared by the assessor. Those constituents’ misery and distress seems to have no end.

The protracted ordeal is just to get the assessment report from Capita to the Department for Work and Pensions. As the assessment reports start to trickle through to the Department, the emerging trend is of further delays in the final decision after the report has reached the Department. So after months of waiting with Capita, applicants face further delays, and that only adds to their misery.

I raised with Capita and the Department a case that encapsulates the ordeal. A constituent made his original application on 5 July 2013 after suffering a serious brain seizure, a stroke and several other seizures. He returned to work initially, but because of his mobility problems he could not continue. He underwent a home assessment on 15 October 2013, and made numerous calls to the Department for Work and Pensions to chase up the progress of his application. Every time, he was referred to Capita because the report had not been sent, but he was told that

“the report is in the final stages with a senior healthcare professional”.

One event epitomises his situation. He woke up one morning and asked his wife to leave him in bed as he was feeling unwell. Shortly after she left for work at 8 o’clock in the morning, he suffered a series of convulsions that lasted approximately 30 minutes. He had difficulty breathing and removing his continuous positive airway pressure mask, which he has to wear because of obstructive sleep apnoea and the danger of a stroke or heart attack. He was unable to get out of bed for the rest of the day until his wife came home at 4.30. He did not eat or drink all day and had to urinate into a bottle.

My constituent’s wife is caring for him but because he has no income from PIP she is at the point of utter exhaustion. The decision to award the benefit is vital to enable his wife to give him the proper care and supervision he needs. Until a decision is made, the couple cannot arrange that care, and their life is in limbo. In March, my constituent finally received his decision notice, only to be informed at the end of the month that a stop had been put on his payment—a decision that could not be explained when he phoned DWP. It has now been nine months and he has not received a payment. DWP’s decision notice states that he is owed a back payment of more than £5,000. He has been let down by Capita and the Department for Work and Pensions as his anguish goes on.

In another case, the application was made in June 2013. The report from Capita was eventually received by DWP on 13 February, but a decision has still not been made. The claimant told me:

“I have no confidence that the process will ever end, there is always one more stage, one more delay.”

That sentiment is felt by many who have lost faith, which is a dreadful stain on the Department for Work and Pensions, where I served as Secretary of State.

The excruciating stress and anxiety is hitting people seriously, including cancer sufferers and ex-servicemen with post traumatic stress disorder. Ministers should be ashamed of the system, which is punitive, nasty and causes abject despair to far too many people.

Kevin Brennan: To emphasise the dilemma facing our constituents, I should say that in a similar case in my constituency a women who suffered a stroke made an application in June 2013, and has just received the benefit. Her husband elected to reduce his hours at work as a result of which they lost the tax credits that they were entitled to, so they went into even deeper problems as a result of the unacceptable delays.

Mr Hain: My hon. Friend makes an important point. I am not going to make personal attacks on Ministers because they probably believe they are doing a professional job, but I sometimes wonder whether they have any idea of what is happening on the ground as a result of their policies.

If the Atos debacle taught us anything, it is the importance of getting the decision right in the first place—in my constituency, the local welfare rights unit had an 80% success rate with its appeals against Atos’s decisions—but that should not mean waiting unacceptably long times such as six, seven or eight months for a decision that could dramatically affect somebody’s life and income. Action must be taken immediately to address this inexplicably lengthy and prolonged system that is causing misery and despair for applicants. The turnaround of applications must be drastically accelerated by both the assessment provider and the Department.

Budget Debate 2014 – it was the banking crisis that caused debt to rocket, the deficit to rise and borrowing to rise

Mr Peter Hain (Neath) (Lab): I agree with the hon. Member for Cardiff North (Jonathan Evans) over Tata, but the one thing that cannot be said about the economy under this Chancellor is that it has recovered quickly from the shock of the global financial crisis. Total output still has not reached pre-crisis 2008 levels, quite unlike in the USA and Germany both of which passed their 2008 peak back in 2011. What took them three years to achieve is taking the British economy under this Chancellor six years, and the reason is the savage cuts since 2010, a far tighter squeeze than in the USA or the eurozone. Under Labour, recovery was already well under way in the first half of 2010 when the Chancellor came into office. It was his policies that choked it off and the British people have been paying a heavy price ever since.

Today we have an unsustainable, out-of-balance recovery. The Chancellor acknowledged that neither investment nor exports are high enough. We already knew that higher consumer spending has come out of reduced savings, not out of higher incomes, because real incomes have been stagnating for years. It is a short-term recovery that cannot last. The ex-chair of the Financial Services Authority and ex-director general of the CBI Adair Turner said so in January at Davos when he warned:

“We have spent the last few years talking about the need to rebalance the economy away from a focus on property and financial services and towards investment and exports. We are now back to growth without any rebalancing at all…If you chuck enough monetary stimulus at an economy something happens. It is as if we have had a cracking great hangover, had a stiff drink and off we go again.”

A second factor making the situation unsustainable is that UK productivity has been flat for years. This pushes up unit costs and keeps our export prices higher. Our export predicament is dire. On top of that, we are witnessing a housing bubble again, with property prices rocketing in London in particular. In short, nothing fundamental has changed to avoid a rerun of a financial crisis brought on by a debt-financed consumer boom and a Government-backed housing bubble that sooner or later will burst, because bubbles always do burst.

Yes, the economy is recovering faster than forecast last year, but growth is forecast to be slower next year than this. The Chancellor expects the economy to run out of steam almost as soon as it starts to grow again, yet there is plenty of scope for much faster growth, and faster growth would mean less need for spending cuts and a quicker reduction in the Budget deficit.

The austerity programme, which this Budget continues to drive forward is based upon what I call the big deceit of British politics: that Labour “overspending” left the country with the mountainous levels of debt and borrowing which the Tory-Lib Dem Government inherited after the 2010 election. [Interruption.] The idea that the global credit crunch was caused by Labour’s public investment in Britain is risible. [Interruption.] The proposition that by building new hospitals and new schools, and by recruiting tens of thousands of extra nurses, doctors, teachers and police officers in Britain, Labour caused the sub-prime mortgage defaults in the US that ricocheted throughout the world’s financial institutions is preposterous. [Interruption.]

Robert Flello: It is amazing to hear the laughter from the Government Benches. Does my right hon. Friend recall, as I do, Conservatives standing up time and again saying there was far too much regulation of the banks and that they needed to reduce it?

Mr Hain: Absolutely.

It was not Labour’s public spending that triggered Britain’s or the world’s economic crisis; it was the global inter-dependency of reckless banking that the Conservatives wanted to be less regulated that in 2008 triggered an economic meltdown in Britain and right across the globe. [Interruption.] Labour responded by boosting public spending and borrowing to offset the catastrophic collapse in private sector spending, and the £90 billion spent on bank bail-outs plunged the public sector into record annual deficits, but these were deficits that stopped a shocking slide into a fatal slump and laid the basis for recovery from the biggest shock to hit the world economy in peacetime since the 1930s great depression. [Hon. Members: “Give way.”] If I have time at the end, I will.

Contrary to right-wing free market mantras and Tory-Lib Dem history rewrites, it was the banking crisis that caused debt to rocket, the deficit to rise and borrowing to rise as well. The low yields on UK Government bonds before, during and after the credit crunch under Labour bore eloquent testimony to the fact that the international markets had full confidence in its policies, and that they were not clamouring for the right-wing dogma subsequently visited upon Britain. Indeed, so desperate was the right hon. Member for Witney (Mr Cameron) to identify with Labour’s success on spending, investment, jobs and growth that he pledged to match Labour’s spending plans for three further years in September 2007 up to 2010. [Interruption.] Members on the Government Benches shake their heads, but that is what he did. If we had spent too much—if all the charges made by the Conservatives were true—why on earth would the current Prime Minister have backed our spending plans for three years ahead? It would help the quality of this debate and the quality of assessment of the Chancellor’s Budget if the Conservatives and the Liberal Democrats had the decency to acknowledge that essential fact, including this Prime Minister’s support for our spending programmes, instead of ploughing on regardless, with no end to austerity in sight.

Mr Redwood: Why did the new and very expensive and complicated regulators the Labour Government introduced fail to control the banks when people like me were telling them they did not have enough cash for capital?

Mr Hain: I agree with the right hon. Gentleman to this extent: we did not regulate the banks well enough or carefully enough, but his party—not necessarily him, but his leadership—was saying that there should be less regulation of the banks at that time, yet now they have the temerity to attack our spending plans when we brought borrowing down. [Interruption.]

Madam Deputy Speaker (Mrs Eleanor Laing): Order. All other speakers have been heard in silence. The right hon. Gentleman has livened up the debate, but he also ought to be heard.

Mr Hain: It is interesting how those on the Government Benches do not like to hear the truth, Madam Deputy Speaker. The level of debt under the Labour Government before the banking crisis was lower than we inherited from the Conservatives in 1997. We brought borrowing down and we brought the deficit down compared with what we inherited, and yes we invested in repairing the desperate state of our public services—people dying on trolleys in hospitals, schools crumbling, the railways decaying. We repaired all of that and then the banking crisis came along and blew it out of the water, and there was a failure by every Government right across the world to recognise the seeds of that banking crisis, but it was not caused by Labour overspending, and not caused by Labour high borrowing or high debt, because none of those things was going on prior to the banking crisis, and if we had not dealt with the banking crisis in the way that we did, the whole of the economic and banking system in Britain would have collapsed. We need the decency and honesty from the Government Benches to acknowledge that central fact.

Investment Banks

Mr Peter Hain (Neath) (Lab): Why, instead of coming out with the usual Government flannel, does the Secretary of State not admit that, according to the House of Commons Library, net bank lending—that is, new loans minus repayments—to small and medium-sized enterprises in Wales has been negative over the last two years? Since the third quarter of 2011, small businesses in Wales have paid back to the banks £148 million more than they have been able to borrow, and medium-sized businesses have paid back £186 million more than they have been lent. The truth is that the banking system in Wales is broken, and the Secretary of State is doing nothing about it.

Mr Jones: On the contrary, as my hon. Friend the Member for Hexham (Guy Opperman) has just pointed out, the Financial Services (Banking Reform) Act has put a great deal more power into the hands of customers. It has also done a great deal to repair the damage that was done under the last Labour Administration.

Rt Hon Peter Hain MP Supports Charity’s Fuel Poverty Campaign This Winter

Neath MP Peter Hain has pledged his support for ‘Mind the Gap’, a campaign aiming to raise awareness of help available for people affected by fuel poverty.

The campaign, run by the national charity Turn2us, is focusing on the growing gap between household incomes and the cost of energy bills, and is highlighting the support available to those who are struggling to pay their energy costs.

Mr Hain said “Fuel poverty is an extremely important issue that can have a hugely damaging effect on people from all backgrounds, and it is vitally important that people realise that they do not have to struggle alone.

Assistance is available to help manage energy bills and I am pleased to be able to support Turn2us’ ‘Mind the Gap’ fuel poverty campaign. I encourage anyone that is worried to take action and use the six steps to help manage their bills.’

The campaign features six steps, using Turn2us’ free tools and information to help anyone experiencing these problems. The steps, available at www.turn2us.org.uk/fuelpoverty include checking welfare benefits entitlement, searching for grants and schemes to help with bills, getting help to improve energy efficiency and checking energy tariffs.

Research by the charity found that a staggering 85% of people across Wales are worried about paying their energy bills this winter. Of those who struggled with these costs last winter, almost two-thirds (64%) suffered stress as a result and over a third (36%) were forced to cut back on food or skip meals.