Local government must respond to in-work benefit cuts

The government is about to announce £12bn of cuts to social security benefits. Although during the election campaign there was a commitment from the Conservative Party to make cuts of this magnitude – but there was no indication of where the axe would fall.

It now seems that the likeliest and biggest cuts will be to in-work benefits such as tax credits. There is an argument (actually, a very strong argument) for saying that employers should pay decent wages (the Living Wage, for example) to reduce the need for tax credits, which in effect subsidise employers. In my view there is no case for cutting tax credits unless and until ‘all employers’ (private, public and not for profit) are required by law to pay the Living Wage or an equivalent. The statutory minimum wage has to be replaced by the Living Wage or equivalent. Given that the government is not going to legislate for this, cutting tax credits must and inevitably will reduce the living standards of many families, where one or more family members are in work. This is not just morally wrong – it is also socially and economically wrong.

Poverty, and especially child poverty, will increase as a result of this policy. Families will have less spending power, which in turn will impact on local economies. We know that there are strong correlations between health and education outcomes and family incomes. The consequences of these tax credit cuts along with other benefit cuts (including the ‘bedroom tax’) and the proposed ever lower benefit caps will have both short and long-term social and economic impact, the scale of which will inevitably vary between regions and places.

Local government must respond. Not only must it demonstrate its robust and on-going commitment to fairness and economic inclusion, it must stand up for local citizens, families and communities affected by the benefit cuts and other cuts to vital public services.

Obviously, local authorities cannot step in and pay the equivalent of the cuts to individuals or their families. They can, however, take action.

This can include promoting fairness and the Living Wage across their areas and with local employers in the public, business, social and charity sectors; they could even publish the names of employers meeting their obligations in this way – perhaps a more positive approach than naming to shame those which are not. They can require all their suppliers of goods and services to pay the Living Wage – and I note with satisfaction that increasing numbers of local authorities are doing exactly this. They can use their procurement spend to support small and medium size employers in all sectors to build the capacity and capability to employ staff on decent wages and conditions. They can also promote and support programmes to improve skills and offer apprenticeships to enable people to find work with decent pay.

Local government should demand the government transfer responsibility for skills and employment schemes such as the Work Programme to local government generally and not solely to a few combined city region authorities. The growth and employment agenda is key for most local authorities and they should seize this with gusto and recognise its contribution to (and integrate with) the wider social agenda.

Many local authorities have adopted successful fairness and anti-poverty programmes. More need to do so.

‘The next few years are going to be very challenging for local government but even more challenging for those reliant on benefits, especially in-work benefits. Responsible progressive local government must understand and have the resolve to act accordingly’

Schemes and services designed to improve parenting, addressing long-term disadvantage and building community resilience are important too. These can and should be developed with and by the people involved, and with a range of public sector and community and voluntary sector bodies including schools. The local business sector has a contribution to make too.

When local authorities are making the hard choices about how to balance their budgets and where to grow services (and more likely where to cut them), they should always involve service users and staff, as well as community groups. They should also always evaluate the potential short and longer-term social, economic, environmental and financial impact of potential options. This analysis should include the impact on employment terms and conditions, fairness, poverty and family incomes as well as the local economy. Whenever possible, they have to seek to avoid adding to the problems caused by central government policies such as those described above.

Local authorities have to recognise and respect the work that charities and other voluntary and community sector groups are doing (and will increasingly have to do) in order to respond to the changes in welfare and the more general impact of austerity. I am thinking here about services such as Citizens Advice Bureaus, food banks, credit unions and many others. Local authorities can provide support to them through grant aid, use of premises, access to professional expertise and in other ways appropriate to their local circumstances.

At a national level, there is a need for the collection and analysis of evidence of the impact of benefit and other cuts; and then for this evidence to be used for a robust and hard-hitting campaign to seek to persuade the government to change direction and/or amend certain policies. Within their legal powers, local authorities can seek to support local community campaign groups. Given that the legal power to do this will be very limited, individual councillors and their political parties can also step in and offer support, while avoiding any perception of takeover or control. And councillors and officers have to respect the right of such groups to challenge councils, as much as they in turn challenge central government. They could, for example, argue for no benefit cuts as long as there are to be tax cuts for those with incomes well in excess of benefit thresholds.

The next few years are going to be very challenging for local government but even more challenging for those reliant on benefits, especially in-work benefits. Responsible progressive local government must understand and have the resolve to act accordingly.





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