Margaret Prosser on the impact of the cost of living on family budgets
According to the Joseph Rowntree Foundation, a 4% increase in income is needed to keep pace with rises in the cost of living and enjoy a decent life style. Meanwhile pay increases for the great majority in our country have landed at 1% on average and many welfare benefits have actually decreased.
The pain caused by this gap is largely felt by the working poor, those on low incomes or who can only find part time work, plus those on benefits for reasons of unemployment, sickness or disability.
Millions of people are struggling to pay for food and to heat their homes, not to mention the high cost of actually having a home. The nine million people in private accommodation are paying out 41% of their incomes on rental costs.
This is why Ed Milliband’s speech to our Party Conference this year struck such a chord with the public. His commitment that a Labour government would freeze energy prices has been welcomed by almost all bar the energy companies themselves and Coalition Ministers. Even John Major, the former Conservative Prime Minister, has spoken out about the unacceptable level of profits made by the main energy suppliers. Unfortunately David Cameron himself has suggested that we, the consumer, play the market and shop around for the best deal. Given that all the main companies charge almost the same amounts for gas and electricity, this advice is pretty much worse than useless.
But energy prices and housing costs are not the only big expenses facing people on very limited budgets. The cost of childcare is out of the reach of many working parents, forcing, usually the mother, to take local part time employment – and often in jobs paying a rate far below her capacity. This means loss of family income as well as loss of income by way of taxes and insurance to the Treasury. Labour has committed to providing an extra 25 hours a week free child care for 38 weeks each year to working parents of 3 to 4 year olds, paid for by an increase in the bank levy rate designed to raise an extra £800 million.
As well as helping to ease the burdens on those least able to bear them, we are committed to work to raise incomes. Work is already taking place to look at ways in which the national minimum wage (NMW) could be strengthened, including considering where it would be possible to set a level higher than the minimum. Very many people earning the NMW are employed by companies which could well afford to pay more, and common sense tells us that we should make sure they do.
No-one could pretend that the answer to these difficulties lies somewhere along a smooth path, and when Labour returns to power we will continue to watch the balance sheet. But we are all working right now towards policies which will reinstate a better balance between rich and poor so that all citizens in our country feel they can be part of society’s success.
Margaret Prosser is a backbench Labour Peer
Published 31st October 2013