Tag Archives: Cuts

Deficit reduction hits the poor hardest

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I share the view of the Pro-Housing Alliance in their submission to the Parliamentary Commission on Banking Standards: the moral collapse in the banking industry began in the 1980s when Parliament deregulated lending, abolished rent controls and allowed the free movement of capital in and out of the UK. It is as if Moses went back up Mount Sinai, deregulated the Ten Commandments – and then wondered why there was so much theft, etc. The Libor scandal is the culmination of a long period of deterioration during which making profit overrode morality.

The Zacchaeus 2000 Trust serves the very poorest citizens of London struggling with a complex benefit system. The abolition of rent controls by the 1979 government, about which the 1997 government did nothing, hit housing benefit claimants very hard when the bankers’ bubble exploded in 2008.The massive increase in private sector house prices, due to reckless lending into a market in short supply, had contributed substantially to the increase in rents and therefore in housing benefit payments; they rose in billions every year, from £5.4 billion in 1986/7 to a planned £19.7 billion in 2007/8 to £21 billion in 2009/10, simply increasing the profits of private landlords.

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Comment on the Riots Communities and Victims Panel report

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The following letter was published in the Guardian last week:

The Riots Communities and Victims Panel calls poverty a key factor that can lead to a person’s involvement in crime. The panel recommends that efforts are made to improve young people’s resistance to the peer pressure that leads them astray. That does not get to the bottom of the problem. Nowhere in the report is there any mention of the actual level of weekly income at which young people live in poverty.

A single unemployed parent has to live on a shrinking jobseeker’s allowance of £67.50 a week, or £53.45 for those aged 18-25, or on the national minimum wage, a poverty wage in London that is also shrinking. The word “debt”, and its debilitating effects on parents and children in poverty, never appears in the report. It damages nutrition, an essential ingredient of healthy babies and a good education, which is likewise ignored. Blaming the schools misses the target. Parliament needs to wake up to the fact that the current system of social security is not fit for purpose.

There will continue to be impoverished young people who, because survival and inequality are massive issues in this very expensive economy, will turn to crime.
Rev Paul Nicolson

Paul Nicolson – The Poverty Trap

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Our Chairman, Rev Paul Nicolson, had the following letter published in The Times this morning.

Sir, Maria Miller (letter, Feb 7) claims that the Universal Credit will lift 350,000 children and 550,000 adults out of poverty — but she comes to this conclusion by using the income threshold before housing costs have been deducted (BHC), below which people are deemed to be in poverty. However, poverty is at its harshest when measured after housing costs have been deducted (AHC). Using the latter measure the Universal Credit cap will add to the misery already created by the housing benefit caps. The higher the rent which is capped, the worse the misery. The level of a single adult’s Job Seekers Allowance is now £67.50 a week and will continue at that level as the Standard Allowance in the Universal Credit in 2013. The two caps create rent arrears which have to be paid out of that £67.50, if the children’s or disabled people’s additional benefits are not to be reduced by the debt. It is already half the governmental poverty threshold and is expected by the Centre for Research in Social Policy to be reduced by £1 a week every year as a result of the coalition moving the annual uprating from the retail prices index to the consumer prices index. The Joseph Rowntree Foundation estimates that a healthy diet costs £47.31 a week. The Royal College of Psychiatrists reports that poverty and debt are trigger factors for, and part of, the experience of those with poor mental health. It is an impossible struggle to pay bills as prices rise and AHC welfare incomes fall.

Z2K Holds Housing Benefit Conference

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Yesterday we held an event in conjunction with 4in10 (a Save the Children initiative which campaigns to reduce London poverty) exploring the effects of reductions to Housing Benefits on London. Speaking at the event were Camila Batmanghelidjh, of Kids Company, Karen Buck MP, Jenny Jones AM, the Green Party’s mayoral candidate, Nigel Minto, of London Councils, and our own Joanna Kennedy.

(Camila Batmanghelidjh, Karen Buck MP, Romin Sutherland [Z2K's Housing Benefit Expert], Jenny Jones AM, Joanna Kennedy)

(Jenny Jones AM, Rev. Paul Nicolson [our Chairman], Camila Batmanghelidjh)

As announced in today’s Guardian, Z2K are launching a dedicated advice line and casework service, NextDoor, that will help people forced to migrate to and settle in more affordable areas.

The event was extremely well attended by a number of people from Local Government and the Third Sector. While the atmosphere was glum, given the likely negative effects these policies will have on vulnerable people in London, in the discussion groups a number of positive potential policies were formulated.

UPDATE

Dave Hill has written about the event on his blog. On it he transcribed a section of Camilla’s speech:

There are many young people who have had to flee their family home from a very young age, and they are prematurely living independently – on their own, without family support. What is very, very important is to understand the implication of this cap in relation to some of those young people.

The truth is that a six-foot boy without a job, without prospects of employment is going to find it very hard to rent a room in a house. Very few people are going to rent their space to such a young person – male or female. They will be worried about whether the person can sustain the bills, what kind of entourage of friends the person is likely to have and bring into the house. And those are legitimate anxieties in the context of some of the challenges that our young people are enduring at street level.

I suspect that we are going to be at the edge of an enormously risky situation, as more and more vulnerable young people aren’t going to be able to rent places to live, or find accommodation. I think it is imperative for government to wake up to the special needs of lone young people. I think the riots of the summer, whatever narrative you put on it, whether you blame the police or anyone else, were profoundly about revenge – about young people’s revenge about society, because they felt so powerless and so not thought about.

Moving forward, I think these caps run the risk of leaving out yet again the special needs of vulnerable young people…they present [themselves for help] with great bravado, and they survive by appearing tough, but fundamentally they are some of the most sensitive individuals in our community, enduring a period of flux both economic and emotional, often on their own, and who do deserve out support.

Sermon on the Steps

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My sermon is directed at the Bishop of London and the Dean of St Paul’s because I don’t think they understand the enormity of the economic injustice that has happened and is happening now,  or the hurt it causes, and  about which we protest robustly but non-violently and peacefully. My understanding of our faith is that we love everyone and put our impoverished, our sick and our old fellow citizens first. We believe that love should inspire the use of power, which should be exercised in the interests of justice. The British Parliament lost sight of those principles when it deregulated lending while copying the government of the United States in the 1980s. The next governments in both nations continued to allow the City of London and Wall Street recklessly to profit from that lack of regulation and to allow landlords to profit from the consequent rise of land prices and rents;  so housing benefit rose to £22 billion a year in the UK. Parliament never put the lid on it. It all blew up in 2008.  Continue reading →

Reform Criticises Welfare Reform

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Writing on a blog last week for the website Public Finance Dr Patrick Nolan, chief economist at leading think tank Reform, has strongly criticised the coalition government’s Welfare Reform Bill.

He calls for what he describes as “expensive and poorly thought-out” reforms to be immediately abandoned. Not enough attention has been paid to how the Universal Credit will be delivered and, it is argued, this lack of detail is likely to lead to expensive mistakes down the line.

He rightly acknowledges that as the scheme is proposed it is likely that many will be trapped in a cycle of dead-end, low paid, unskilled jobs as there is no incentive to find secure, skilled work. However he fails though to point out the inadequacy of Job Seeker’s Allowance and the Minimum Wage to provide a healthy lifestyle, inhibiting both job seeker’s ability to find gainful employment and many workers from lifting themselves out of poverty.

This very real problem faced by many of Britain’s poorest and their dependents, who make regular decisions about whether to eat or heat their homes, will not be solved until the Department of Work of Pensions considers the health of those on poverty incomes and the Department of Health considers income.

For more evidence on the shortfall between these poverty incomes and a minimum income standard, see Z2K’s response to the DWP.

Energy awareness conference

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In January we held an Energy Awareness Conference in association with Consumer Focus. The event brought advice agencies and energy suppliers together to discuss consumer support and protection. The slides and the report is available below. 

We’ve had some great feedback and are beginning to consider how we can continue to develop these relationships, including through the formation of an advice agency group that meets regularly with the industry to discuss issues and how to strengthen processes to help consumers. Please email admin@z2k.org if you are interested in participating in the group. Continue reading →

Ruling curtails debate on cuts bills

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The savings accounts and health in pregnancy grant bill had its first reading in the House of Lords on 23 November. The Speaker of the House of Commons ruled, after the third reading in the Commons, that it was a money bill. This means that out of the 21 cuts to the poverty incomes of welfare claimants proposed by the coalition, any amendments to the three of them proposed by the bill cannot be debated in the House of Lords. This approach could be used to prevent the Lords from discussing other money-related changes in legislation.

The bill has been strangled without thought to the consequences. Our greatest concern is that incomes that in all government and independent measures are substantially below the poverty line will suffer cuts – of which the health in pregnancy grant is one – without any assessment of the impact on the health of women of child-bearing age, their foetus or their offspring; or the cost of the consequential mental and physical ill health to the NHS or the economy at large.

The NHS has announced that mental illness already costs the economy £105bn a year, including days lost at work – far more than heart disease, cancer or obesity. The Government Office for Science has shown there is a relationship between debt and mental ill-health. Cutting poverty incomes creates the need to borrow, normally at high interest, for necessities like food and to pay bills like utilities. Claimants of welfare already owed the state £3bn last year due to errors by them and officials in the delivery of benefits.

Lord Bassam’s motion enabling amendments to the bill to be debated and decided in committee in the House of Lords should be supported by peers on Monday 29 November.

The Guardian, 27 November 2010 by Paul Nicolson, Chairman of Zacchaeus 2000 Trust

Polly Toynbee made the below comment in her column of the same date.

And how about this? The Speaker has just declared every bill with a cut in it as a “money bill”, and not eligible for Lords debate, amendment or vote. This week the bill cutting the child trust funds, health in pregnancy grant and the savings gateway for low-income families was deemed as a money bill-although the Lords voted on it when Labour originally introduced it.

As there is no appeal against a Speaker’s diktat, Labour is seeking to protect the right of the Lords to debate and scrunitse these bills that have deep social implications. If they can’t, no cuts stand a chance of scrutiny, and the second chamber becomes virtually redundant when cutting is the government’s business. For the first time, a coalition gives the government a majority in the Lords, yet Cameron is stacking in another 67 on their side. Those Lords resisted an elected chamber had better prove their vaunted independence by kicking up an almighty stink at being denied any voice in the main cuts legislation whizzing through Westminster.

There is nothing fair about cutting incomes already stuck in poverty.

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The Guardian 19th October 2010

Simon Jenkins believes the government needs all the poor it can muster to defend the cause of cutting from the rich. (Cutting from the rich and clobbering the middle, Cameron looks like a lefty, 15 October). There are many poor people in the UK but, standing justice on its head, the government’s propaganda has thundered the message that they are exploiting the rich, so opening the way to cutting the welfare of the poorest.

Britain has the lowest adult unemployment benefits in western Europe at 40% of average earnings – others are around 60% to 70%. They are also half the UK poverty threshold and 40% of the Joseph Rowntree minimum income standard. Despite this deep poverty the coalition has moved the annual uprating from the more generous RPI to the meaner CPI. Even the RPI never kept up with the increase in prices of essentials such as food and fuel.

The effect of the move will reduce the buying power of jobseeker’s allowance/employment and support allowance of £65.45 a week, £51.85for under-25s, by about £1 a week per year if current inflationary trends remain unaltered. This is a cumulative £3bn taken
from the pockets of the poorest over the next 10 years assuming a steady claimant count of one million, without a thought to the existing misery”, poor maternal nutrition, poverty-related illness and educational under achievement, with their huge costs to the taxpayer.

Rev Paul Nicolson
Chairman, Zacchaeus 2000 Trust