Nia Griffith MP has accused the Tory – LibDem coalition of choosing policies on tax and welfare which have hit the poorest in Wales hardest, and are wrecking the economies of the poorest parts of Wales. Summing up at the end of a parliamentary debate, instigated by Labour on the effect of the Tory LibDem government policies on Wales, Nia Griffith MP Shadow Wales Minister said,
“We are talking about the choice that this Government has made about their tax and welfare policies. That choice means that Ministers have deliberately chosen to place a disproportionate burden on those with the lowest incomes in Wales. As we predicted back in 2011, and as has been shown in a recent study from Sheffield Hallam University, in Wales the Tory-Lib Dem Government’s policies on tax credits and welfare have resulted in £1 billion each year being taken out of the Welsh economy, with the losses falling disproportionately on the poorer areas of our communities.
This Government’s changes to tax credits alone have taken £200 million a year out of the Welsh economy. These cuts have meant a loss of income to some 250,000 households across Wales. These are homes where people are in work, often in thankless tasks, often patching together several jobs to try to make ends meet, and working unsocial hours, yet it is Welsh families like these, the very people least able to afford a drop in income, who are losing income. The average loss of income as a result of the Government’s tax credit and welfare policies amounts to some £550 per working age adult in Wales per year, a greater loss than the average for Britain as a whole, which is £470 per annum.
However, in many of our poorest areas, the average loss is over £1,000 per working age adult, amounting to some £2,000 for a two-adult family or some £40 a week, which is a huge loss when we consider that these people already have some of the lowest incomes in Wales. That takes into consideration only changes to tax credits and welfare; it does not take into account the effects of, for example, the VAT hike, which further curtails spending power.
Not only is it very unfair to take such a disproportionate amount of money from those with the lowest incomes while at the same time handing tax cuts to millionaires, but it is economic madness. It is not rocket science to perceive that those who earn least spend it most quickly in their local communities. They do this out of sheer necessity, spending the money on everyday essentials, so when they suffer cuts in their household incomes, there is an immediate knock-on effect in the local community. Those with the lowest incomes are the least likely to have the financial means to travel far to spend their money, so it is our very poorest communities that suffer the greatest loss. No prizes for guessing that that means the tops of the valleys, the areas furthest from the wealth-generating opportunities of our cities and our major transport infrastructure.
This loss to the Welsh economy has been quantified by the researchers from Sheffield Hallam University as equivalent to the loss of 7,000 full-time equivalent jobs across Wales, but with the highest concentration of such job losses in the areas of greatest deprivation. In reality, that loss of 7,000 full-time equivalent jobs manifests itself in people having their hours cut and not being able to get as many hours work as they would like, and fewer openings for our young people. There are now 71,000 part-time workers in Wales who would like full-time work, up from 54,000 in 2010, so this Government’s taxation and welfare reform is resulting in the poorer areas of Wales getting poorer. By sucking money out of these areas, the Government are making it ever more difficult for these areas to recover economically, and the gap between these areas and the wealthier parts of the UK is growing. As my honourable friend from Ogmore (Huw Irranca Davies) pointed out, we are seeing the many problems of insecurity at work, low pay, unfavourable terms and conditions for workers, and the scandal of umbrella companies where workers are actually paying employer contributions as well as their own contributions.
The Conservatives’ shilly-shallying over Europe is driving companies to question whether to make new investment here. Let us make no mistake: if the Government are seen to be rushing for the exit from Europe, we will lose those companies, with the loss of thousands of jobs.
So when are we going to see some action from this Government to address the concerns of the people of Wales by tackling the high energy prices, job insecurity and the low-wage economy?
Will the Minister tell us now that he will match Labour’s energy price freeze? What will he do about low wages? Will he match our pledge to raise the minimum wage to 58% of median earnings? What will he do to tackle insecurity at work in Wales? Will he sign up to Labour’s pledge to tackle the abusive use of zero-hours contracts? Will he show some humanity and abolish the bedroom tax in Wales? I guess not. He would rather see people across Wales working longer for less, the poorest areas in Wales getting poorer, and people struggling with fuel bills. He is happy to give out tax cuts to millionaires and see a recovery for the few, whereas Labour wants to see a recovery for the many.