Tom Tugendhat: We must step in to fund supported housing for military veterans

24 Jun

Tom Tugendhat is MP for Tonbridge and Malling and Chair of the Foreign Affairs Select Committee.

Tomorrow’s Armed Forces Day celebrations are a time for the country to thank the men and women who serve now, and the estimated 2.4 million British veterans who have served and sacrificed in the past.

It is a time to honour their service, but it is also a time to reflect about how we as a country can better serve their needs in the future.

However well our Armed Forces protect the physical and mental health of those who serve, we know that the very act of service can take a heavy toll.

According to research from the King’s Centre Military Health Research, PTSD is nearly twice as common in ex-service personnel as in the general public. Among those deployed in a combat role it is more than four times as high.

Too many homeless veterans are still sleeping rough on the streets of British cities and towns. Nearly 2,000 veterans live in supported housing, which is largely funded by charities and competitive grant funding, and as many as 4,000 of our service men and women are in urgent housing need.

Veterans who find themselves homeless often have complex needs. They need specialist provision with higher levels of staffing and greater expertise. Such services do exist – and they transform lives – but the financial future of these services remains uncertain.

As it stands there is currently almost no central direct government funding ringfenced for supported housing for British military veterans. It is the only sector of supported housing where the majority of funding comes from charities.

But many charities have withdrawn support. The main providers of specialist housing for veterans estimate up to 35 percent of charitable funding has been lost in the last decade.

That means that some vital facilities have either closed or scaled back. Riverside Housing’s specialist veterans’ support service, the Beacon, just a short distance from the world’s largest British army garrison in Catterick, has helped to support and provide accommodation for nearly 350 veterans affected by homelessness over the course of ten years.

However, the Beacon had to cease offering specialist support services to veterans in October last year, including support for PTSD, substance abuse, and physical disability. Its statutory funding had dwindled from £242,072 in 2012/13 to just £50,750 by 2020/21. That means it can no longer offer a place to live for veterans with complex needs.

What these services are crying out for is a sustainable funding stream that allows them to plan effectively and meet the needs of our veterans.

The four leading providers of supported housing for veterans, Riverside, Launchpad, Alabaré, and Stoll, estimate less than £3 million a year would secure the future of the 966 units that already exist, and provide 200 more to meet demand.

This is not just a way of meeting our responsibility as a society to those who risked their lives in our service. It is an investment in positive outcomes. Properly funded specialist supported housing gives veterans the stability they need to rebuild their lives.

It reduces costs to the NHS and other support services, by leading to fewer visits to A&E, reduced demand for GP and community mental health services, and fewer complications caused by drug and alcohol problems.

It allows veterans to get their finances in order, and to focus on living productive, fulfilling lives. It breaks the spiral that leads to rough sleeping, when positive outcomes become harder, and more expensive, to deliver.

It also means we get full value from other important investments. For example, veterans can now receive specialist mental health care as part of a new NHS service called Operation Courage.

Service men and women are trained to soldier on independently. It is well recognised that veterans take longer on average than others before asking for help and a lot of the issues that occur as a result of service can take several years to present themselves.

Because of this independence veterans are very reluctant to ask for the support they need in mainstream homeless services and homeless hostels are not suitable especially for those with complex needs.

Veterans need to be around and supported by people who understand the experiences they have gone through.

The current administration should be proud of its record in helping British military veterans. In his first week in office after becoming Prime Minister, Boris Johnson created the UK’s first ever Office for Veterans Affairs (OVA).

The OVA’s Veterans’ Strategy Action Plan released earlier this year contained pledges to ensure consistent data on veterans’ homelessness and to end veterans’ rough sleeping by 2024.

In this action plan by the end of this year the Department for Levelling Up has pledged to conduct research to understand the supply of supported housing, including that which meets the needs of the veteran community, and to provide an understanding of any needs gap.

As part of this review, I strongly urge DLUHC and the Treasury to recommend that central Government provides long-term, ringfenced statutory funding to cover all the supported housing needs of our military veterans, including those with the most complex needs.

The Government of the United Kingdom greatly values the contribution of all our veterans.

My worry is that these vital services have been left without statutory funding not because of a lack of empathy, or even political will, but because the funding situation is complex and therefore the issue has fallen through the cracks.

But when the issue falls through the cracks, so do the veterans; and that simply cannot stand.

We have the best servicemen and women in the world. They have served and supported us. It is our duty to support them when they need it.

Any readers of this wishing to show their support for statutory funding for supported housing for British military veterans can sign up here.

The post Tom Tugendhat: We must step in to fund supported housing for military veterans first appeared on Conservative Home.

Rocio Concha: The Prime Minister says he wants to focus on the cost of living crisis. Here are the actions he should take.

15 Jun

Rocio Concha is Director of Policy and Advocacy at Which?

The soaring cost of living is front and centre in so many minds at the moment. Prices are rising in virtually every area, from supermarket checkouts to petrol forecourts and household bills. The question of how to provide solutions to the cost of living crisis, and to help those most in need of support, at a time when the public finances are stretched, is a challenge preoccupying policy experts everywhere.

At Which?, we’re no different. Every day, we’re hearing from consumers struggling to make ends meet. Our recent research found that nearly six in 10 households are making adjustments such as cutting back or dipping into savings to cover essential spending, while an estimated two million households have missed a housing, bill, credit card or loan payment in the last month.

The concern goes beyond the financial. A sense of despair, stress and suffering – emotional and physical – comes through in our research. One respondent, who earns just over the Universal Credit (UC) threshold, wrote of ‘losing sleep and having to go without more’ amid soaring costs. She, like others, has either drastically reduced her heating usage – or is simply not turning it on.

With the energy price cap expected  to increase to around £2,800 in October, the Chancellor’s recently announced measures to provide financial support for households, with further, targeted support for those most in need were very welcome. However, there are also groups of consumers who have traditionally been able to manage that are now also feeling the squeeze. The challenge for the government is how it can deepen and widen its assistance to ensure more households aren’t falling into further financial hardship.

Which? has identified five areas where the government can act quickly, at little cost to the public purse in some cases, and can work with businesses to help millions of consumers. None of these proposals is intended to be a silver bullet: the cost of living crisis is being driven in large part by external factors beyond the government’s control. However, if implemented they could help to mitigate the impacts.

The first is to reduce the amount of VAT paid on telecoms from twenty per cent to five per cent. Connectivity is an essential part of our daily lives, but that isn’t reflected in how these services are taxed. By contrast to other essential services, VAT on energy is charged at five per cent, with water and wastewater services zero rated. We estimate that a reduction in VAT could save those on a standard broadband tariff up to £57 a year, and those on a social tariff up to £37.50 a year.

The second is to ensure that people don’t face unfair exit fees when switching to cheaper deals, particularly in the energy market, where exit fees on fixed tariffs have soared in recent months. This could leave people who have sought the security of fixed tariffs facing a bill of up to £600 if they find themselves in a tight spot and need to switch to a cheaper deal.

While exit fees can be important in terms of helping providers recoup their upfront costs of delivering a service, now more than ever they must remain fair. When energy suppliers are to be compensated for losing customers on more expensive deals through the market stabilisation charge, how can charging consumers so much be justified? The regulator should  investigate to ensure businesses are not taking advantage of consumers.

Third, use government data to ensure support is reaching those who need it. Initiatives such as the Warm Home Discount, and the Cold Weather Payment are lifelines to customers without sufficient disposable income to be resilient to sudden change. However, the process to access such discounts remains largely manual and can be cumbersome, with unnecessary barriers to overcome.

Speed and ease of access to discounted services are critical but there could well be millions of people eligible for discount schemes who are unaware of that fact. Ofcom data, for instance, suggests just 1.2 per cent of UC claimants have taken up broadband social tariffs. A proactive government approach, led by data, that harnesses  data to speed up access and makes it easier to prove eligibility for these schemes and which also reaches out to households at risk could make a huge difference.

Fourth, support consumers dealing with a rapid increase in household food insecurity. Any consumer, whatever their income, will have noticed that the price of groceries at the supermarket has gone up. The result, as recent Which? research found, has led to just over one in 10 skipping meals. Many have told us that they are now having to resort to food banks. The decision to therefore water down, ignore or put off for further consultation many of the recommendations made in Henry Dimbleby’s National Food Strategy to support people who are struggling the most, such as extending the eligibility for free school meals, and expanding the Healthy Start Scheme, is very disappointing and lacks the ambition required to tackle this serious issue.

Fifth, and finally, intervene to help ‘mortgage prisoners’, who have been trapped paying excessively high interest rates after their mortgages were sold to inactive lenders and affordability criteria changed. As of June last year, the Financial Conduct Authority estimated that there were 195,000 mortgages in the population of closed books with inactive firms. As the Bank of England puts up interest rates, these people will be delivering a windfall to the investment firms that bought those mortgage books.

The cost of living crisis is having an immediate and significant impact on UK households, causing real suffering. The Prime Minister announced in the wake of this week’s confidence vote that he was focused on this issue. While action to date has been welcome, the five proposals set out here are designed to provide immediate relief with long term stability to consumers accessing services that are life essentials. We call on ministers to consider these simple and practical solutions that will make a difference.

The post Rocio Concha: The Prime Minister says he wants to focus on the cost of living crisis. Here are the actions he should take. first appeared on Conservative Home.

Anvar Sarygulov: Conservatives must make simplifying the welfare system an urgent priority

16 May

Anvar Sarygulov is the Head of Research at Bright Blue.

With the public struggling financially, reports that Cabinet ministers are looking to find new ‘non-fiscal’ ways to combat the cost of living crisis were met with a significant degree of derision.

But it is good for Conservative ministers, and the departments they lead, to take a long, hard look at how to better use existing schemes which are already in place to support those on low incomes.

A particular area for improvement is the headache-inducing, byzantine quagmire of disparate state benefits, grants, and payments that support the most vulnerable in our society.

Currently, many government schemes which could be playing a key role in supporting families through this current crisis have low levels of take-up. Part of the challenge of increasing take-up is the significant administrative hoops low-income families need to jump through to access them.

First, they must be aware of their existence, and then also submit pages of personal information that the Government for the most part already holds. This creates an unnecessary administrative burden not only for the claimants, but also for the state.

For example, take Healthy Start vouchers. They provide weekly food vouchers worth between £4.25 and £8.50 to low-income mothers, from their tenth week of pregnancy to the fourth birthday of their child. In March 2022, this NHS-administered scheme had a take-up rate of 72 per cent in England and Wales.

That means that almost 150,000 households in need were not receiving a significant sum of money that could alleviate the need to visit a food bank – even though the Government holds most of the information needed to automate claims for the vouchers.

It is not only the state’s offer to help with costs of birth that are afflicted by low take-up, but also its offer to help with the costs of death.

The Funeral Expenses Payment, which provides help for costs of a funeral for those on low incomes, paid out on average £1,838 in 2020-21. But before the Covid-19 pandemic, the number of awards steadily decreased, from 40,000 in 2006-07 to 25,000 in 2019-20, despite the number of deaths increasing in the same period.

It is certain that there are low-income families out there who are missing out on thousands of pounds of support at a very difficult point in their lives, because of lack of awareness or the complex 25-page form.

There are also substantive concerns about the take-up of the support offered through the recently-introduced Household Support Fund, which provides low-income households with ad-hoc grants or vouchers through their local authority. Rishi Sunak committed a further £500 million to this Fund in the 2022 Spring Statement.

Each local authority, already greatly stretched in terms of resources, is responsible for the design and rollout of their own scheme. There are also barriers for low-income people to access it, who not only need to be aware that the Fund exists, but must also then submit information about their financial status.

The growth of the social security system over many decades has led to the accumulation of layers upon layers of complexity to address new and emerging needs. But the labyrinthine nature of our welfare system is now hurting both the government and those it is supposed to support.

In this context, the Conservatives need to be proud of the core achievement of Universal Credit: simplifying six disparate in-work and out-of-work payments scattered across three government departments into one streamlined benefit. Now they need to boldly continue their work in reducing complexity.

Rather than continuing to bolt-on new ways to support people, like the Household Support Fund, and growing the administrative behemoth that is our social security system, the Government needs to think much more about how it can use the existing benefit systems and information databases to provide simplified help to people who need it.

The changes to the Warm Home Discount scheme being introduced this year, which will use government-held property, benefit and tax data to automatically identify low-income households most in need of help with heating bills, is an example of what ministers should be doing across the social security system.

Getting more people to take-up existing schemes will not be sufficient to tackle the cost-of-living crisis given its scale: with inflation forecast to peak at ten per cent this year, but benefits only rising by 3.1 per cent this April, the outlook for low-income households is dire.

However, reducing complexity will still substantively benefit thousands of low-income households who are currently missing out on vital support, and it will be through simplifying bureaucratic demands and harnessing the power of technology that the Conservatives will make a difference and increase take-up.

Gerard Lyons: Sunak should raise the lower tax threshold this autumn to put more money in people’s pockets.

5 Apr

Dr Gerard Lyons is a senior fellow at Policy Exchange. He was Chief Economic Adviser to Boris Johnson during his second term as Mayor of London.

Higher inflation is inevitable. An economic slowdown is expected. Recession is possible. That is the economic outlook and challenge facing the UK. The question is whether policy makers are doing enough?

This troubling economic climate is not unique to us. All western economies are facing an imminent inflation challenge. And, alongside the war and its consequences, this is starting to weigh on confidence and growth prospects for later this year and next.

It was against this backdrop that the Chancellor delivered the Spring Statement two weeks ago. In many respects, it was a missed opportunity. While he cannot be blamed for higher inflation or fuel prices, and although there were some welcome measures, he has to accept some responsibility for the tax take continuing to rise and failing to increase benefits in line with inflation ahead of the cost-of-living crisis.

As expected, the Official for Budget Responsibility (OBR) projected a slowing economy over coming years and higher inflation before it subsides. After 7.5 per cent growth last year, growth is expected to slow to 3.8 per cent this year and 1.8 per cent next. Inflation, meanwhile, is expected by the OBR to rise from 2.6 per cent last year to an average of 7.4 per cent this, and then be four per cent next and 1.5 per cent in 2024.

Such an outlook – with the cost-of-living squeeze hitting people hard, and an economic slowdown ahead – added to the pressure for the Chancellor to do more to help.

Rishi Sunak stepped up to the plate during the pandemic, and perhaps the challenge from that is that it has created the impression that there is a bottomless pit of money into which he can dip. There isn’t.

Yet, as the Spring Statement showed, while debt is still historically high, the public finances are on an improving trend because of the strong rebound in the economy over the last year. This presented the Chancellor with ample room to act. Public borrowing was £321.9 billion in 2020-21 and is now expected to be £127.8 billion in the last fiscal year, 2021-22, which is £50.9 billion lower than the OBR forecast only last October.

But even last autumn it was clear that the finances were improvingm and at that time this cast doubt on the need to announce the increase in the national insurance. Moreover, the margin of error on these budget forecasts is high, suggesting the Chancellor should not feel bound by them when it comes to fiscal policy – especially for predictions several years into the future.

There is still much uncertainty about how resilient the economy will prove to be, as previous monetary policy stimulus is replaced by tightening, as the post-pandemic rebound loses momentum and as the cost-of-living squeeze bites. Measures of confidence have already started to deteriorate. The GfK measure of consumer confidence fell to its lowest level in sixteen months of -31 in March. This will likely get worse.

The biggest problem has been monetary policy and in this context the Chancellor should – at some stage – call for a fresh look at the Bank of England’s remit, operations and communication.

For more than a decade, the UK has suffered from a cheap money policy. This has had three damning consequences, each with economic and political implications.

First, it has fed rampant asset price inflation, not just in financial markets, but in property prices. This has fed inequality and inter-generational problems.

Second, the combination of low rates and the Bank’s buying of government debt through large-scale quantitative easing has contributed to financial market instability, with markets not pricing properly for risk.

Third, monetary policy has contributed to inflation. Even though the pandemic and supply shortages may have been a catalyst for rising inflation, the Bank’s complacency last year fed the problem. Moreover, it now means too that if the Bank has to tighten monetary policy, it will do so at a time when the economy is less able to cope.

With monetary policy having been too loose for too long, the uncertain economic climate might suggest the need for the Bank to tread carefully. It also added pressure on the Chancellor to do more.

Now, two weeks after the Statement, the dust has still not settled. In part, this is because there is increasing concern about what lies ahead economically, and whether the Government may be forced to act further.

The Treasury’s mindset is on balancing the budget – which they don’t do well – at the expense of economic growth. The prospect of slower future growth means more of the deficit is viewed as structural, not cyclical, necessitating fiscal caution. Furthermore, the fiscal rules which are aimed at making the fiscal numbers appear credible can end up embedding tax increases into future numbers to pay for spending plans.

Concern about the rise in debt service payments in the coming fiscal year also appeared to weigh on the Spring Statement’s plans. Perhaps this was overdone, with this rise explained by the increased cost of the principle of index-linked debt. This future liability counts as borrowing in the year in which it accrues, hence the spike in the next fiscal year which should not divert attention from the improving trend in the budget finances.

The Chancellor did unveil some significant and welcome targeted measures to cushion the pain. Most notably, increasing the National Insurance threshold, bringing it in line from July with income taxes at £12,570. This helped many people.

The other was the immediately fuel duty cut by five pence per litre until next spring – although this has not been fully passed on. This followed on from help announced before his Statement on council tax, fuel bills and changes to the universal credit taper rate. He also pre-announced a cut in income tax.

The alignment of national insurance and income tax allowances was a big deal. It not only helps simplify the tax system, but may be a stepping stone to abolishing national insurance completely. This is something many Chancellors have talked of, but none have done. This moves that closer.

Despite this, more should have been done and more help is now likely. This leads onto whether the Government is seen to be on the front foot, or are forced into acting. For instance, benefits could have been increased in line with the latest, higher inflation numbers. Also, recently announced changes to student loan repayments were unnecessary, and expensive for students, but bring in the Treasury sizeable revenues.

Looking ahead, there is still scope for the Government to cut taxes such as VAT on fuel, and shift green taxes from fuel bills onto general taxation (else they might be seen as a green poll tax, not linked to peoples’ ability to pay).

I would suggest raising the lower tax threshold this autumn, if not sooner, to put more money back into peoples’ pockets and to start to reduce the overall tax burden. Raising the upper tax threshold may be too expensive, or not politically acceptable.

Overall, the OBR reported that living standards are expected to fall by 2.2 per cent this coming year – the largest fall on record. And, despite the statement’s measures, previously announced policy measures and the more tax-rich composition of economic activity, the tax burden is set to rise to its highest since the late 1940’s, from 33 per cent of GDP in 2019/20 to 36.3 per cent in 2026/27.

Alleviating the cost-of-living crisis, keeping inflation in check and delivering stronger growth is the aim. This should be supported by smarter regulations and sensible taxes that lower the overall tax burden.

Joe Shalam: Sunak must mount a three-pronged attack to skewer the loan sharks

22 Mar

Joe Shalam is Policy Director at the Centre for Social Justice.

Politics has always been a game of nicknames. One need only look at the number of ‘Captain Hindsight’ references in Hansard to see that – ten already this year.

At PMQs last month, Sir Keir Starmer trieds a new one, branding Rishi Sunak ‘the loan shark Chancellor’ after his £9.1bn cost-of-living announcement. Watching on a year into the first major study of illegal moneylending in England in a decade, I couldn’t help but wince.

At the Centre for Social Justice (CSJ) we have known for a while, informed through the whispers of our regional network of local poverty-fighting charities, about the debts owed by their clients to suspicious ‘friends’ or shadowy local figures.

Shrouded in taboo – and the complex emotions felt by borrowers in discovering that the person they had turned to was, in fact, not a friend at all – hidden debt of this kind can cause untold misery to individuals, families, and sometimes entire communities.

But the scale of the problem of illegal money lending today is far worse than we had previously imagined. In a new report published this week, Swimming with Sharks, the CSJ reveals that there could be up to 1.08 million people currently borrowing from an illegal lender (commonly known as loan sharks) in England. While by its very nature it is difficult to produce high confidence estimates of the scale of hidden debt, this is over 700,000 more people than those identified in the last official study.

Digging through the largest sample of known victims of illegal lending compiled to date, it becomes clear that the stereotypical image of muscle-bound brutes patrolling estates with baseball bates rarely matches the reality.

There is, in fact, a vast gradient of perpetrator – from ostensibly benign members of the community who lend ‘on the side’ while pestering their ‘customers’ into shouldering more debt, to loan sharks embedded in organised crime groups and drug gangs.

Yet listening to the stories of victims we have been struck by the sinister psychological methods of coercion brought upon them by lenders of all types, 55 per cent of whom borrowers tragically considered friends. Children given selection boxes at Christmas as a display of the lender’s control. Explicit photos held as ‘securities’. Threats to destroy marriages by informing unsuspecting spouses of their ‘nasty secret’.

All the while, lenders are employing new methods to reach vulnerable people 24 hours a day via social media, one convicted loan shark even paying an ‘influencer’ to entice victims.

It also becomes clear looking at the data of known victims that, while no one is safe from exploitation, it is overwhelmingly the most disadvantaged among us who are affected. Two thirds of victims were already indebted and earning below £20,000. Savings were absent for all but one in ten.

With 45 per cent of victims using the cash for everyday expenses and household bills, the combination of mounting pressures on household budgets, low financial resilience, and increasingly limited credit options is liable to produce a perfect storm in which people are driven towards exploitation.

This week the Chancellor will announce further measures to buffer the squeeze on living standards. Using the additional income tax revenue collected last year to lift the threshold for National Insurance would benefit many lower earners, although Universal Credit (UC) should also be employed to funnel additional financial support directly to those most in need.

The dynamism built into UC should be used to uprate benefits by inflation more responsively in-year (and in line with future energy bill spikes). Cutting the maximum UC debt deduction claimants can receive and remitting old tax credit debts (caused by errors made during the Brown era) would also help those on the lowest incomes through the turbulence.

Fiscal measures, however, will only take us so far. We must urgently renew the fight against illegal money lending, appreciating its complexity as a social and cultural, as well as an economic, phenomenon. The Government has already made welcome commitments to address economic crime, but we propose a three-pronged attack to ensure that tackling illegal lending is at the forefront of this agenda.

First, we need to clamp down hard on lenders. Achieving this will be largely determined by the scope of the key statutory authority, the Illegal Money Lending Team England, to identify victims and prosecute suspects. The team has shown it can deliver on a limited budget, but it must be equipped now to scale up operations given the context we are in. Simultaneously, the Government should also use the newly inked Online Safety Bill to address the new frontier for illegal lending: social media.

Second, we must better protect the most vulnerable through a generational national awareness campaign of both the dangers and support available, stretching every sinew of debt advisers, councils, police, housing providers and work coaches to bring hidden debt to the surface.

Finally, we must provide the alternative. The Government should strip away the red tape stuck in place from the 1970s and liberate credit unions to become bigger and bolder, reaching thousands more of those at risk. We must also raise underlying levels of financial resilience in Britain by increasing the uptake of the excellent but under-utilised Help to Save scheme introduced by the Economic Secretary to the Treasury, John Glen.

While banter in the House of Commons should always remain fair game, illegal lending cannot. We must see it for the very real threat and danger it represents to our communities.

And with illegal lenders licking their lips at the desperation set to accompany the emerging cost of living crisis, we must act now to help the thousands in England who are swimming with sharks.

James Bethell: The Government should drop the ban on asylum seekers working

22 Mar

Lord Bethell was Minister for Innovation at the Department of Health and Social Care during the pandemic.

The plight of Ukrainian refugees breaks my heart. There’s a strong feeling that they should be welcomed to Britain and given a safe-haven to rebuild their lives. I applaud the Government for moving quickly to make that happen. I have started the process to welcome my Ukrainian friend and her daughters to our home so she can live safely and restart her business in the UK. I hope we can make a difference to their lives.

The Ukrainian refugee crisis puts a vivid spotlight on the way we treat other asylum-seekers. Very few in the asylum system pass the government’s strict criteria for a work permit, which rules that unless you have been waiting more than 12 months and your profession is on the highly restrictive shortage occupation list, you must remain jobless.

To repeat, we have a Conservative government that effectively bans people from work, that stops them from improving their lot through their own individual hard work and effort.

Nothing could be more deeply un-Conservative. Utterly central to our beliefs is that the right to work is a basic human right. Margaret Thatcher put it very emphatically in her first speech to the Conservative Party Conference (1975),

” A man’s right to work as he will, to spend what he earns, to own property, to have the State as servant and not as master; these are the British inheritance. They are the essence of a free economy. And on that freedom all our others depend.”

She was right to see the right to work was a moral question, not an administrative authorisation to be decided by bureaucracies. She saw it on the same level as the unalienable constitutional rights listed in by the Founding Fathers of the United States of America, “life, liberty and the pursuit”. These rights, they argued, have been given to all humans by their Creator, and governments are created to protect.

I agree with Margaret Thatcher.

She is right that one of the unifying beliefs that unites the various traditions of Conservative thinking is that that the role of the state is to help people into work, not to stand in their way.

Around half of asylum-seekers are make successful applications, and we want those people to become integrated members of British society, standing on their own two feet and contributing to the national prosperity.

And for the other half, they will move on, either to return to their homeland or to make a home elsewhere, and we would like to think that their time in the UK had left them with a positive impression. Emasculating both groups by denying them the right to work during their application period will not encourage them to become responsible members of society, quite the opposite.

Instead of following core Conservative principles, the Government seeks to hold on to this ridiculous rule which was introduced by a Labour Government in 2002. Instead of encouraging people to take responsibility for their lives and benefiting from their hard work, we demand that people perfectly capable and willing to work must instead sit on their hands and depend on state benefits, letting their skills go to waste, keeping them isolated from their local communities, and harming their chances of building a successful new life for themselves in which they contribute to the UK.

Whether or not people succeed with their asylum claim, while they are here waiting, they should be working, for the good of themselves and society. We have got the moral imperative the wrong way round. Protecting refugees does not mean locking them up or restricting their right to work.

Change would be popular among voters. YouGov Polling commissioned by the Lift the Ban coalition shows that more than 80 per cent of the public think that asylum seekers should be given the right to work while they wait. It’s not a great surprise that the public, who voted for a Conservative Government, support a policy that follows Conservative values.

Home in on individual constituencies and the results of the polling are more interesting still. Whether it’s a Blue Wall seat, a Red Wall seat, a Cabinet Seat, the Home Secretary’s seat or even the Prime Minister’s seat, most people think asylum seekers should be allowed to work.

And businesses want change as well. In polling carried out by Survation, 60 per cent said they supported asylum seekers working. As Conservatives we are the party of business, and we must make sure that this is loud and clear.

By denying people seeking asylum the right to work we are also depriving businesses of much-needed labour.

It won’t have escaped anyone’s attention that the UK has a huge labour shortage problem. According to the ONS figures release in February there were 1.3 million job vacancies in the period November to January, another record.

That’s thousands of businesses up and down the country who are keen to build back better post Covid and see the UK take back control as Brexit allows us to do. Instead, they are being hamstrung by red tape that has somehow become Conservative policy to keep in place rather than consign to the policy bin.

As well as individual prosperity and national prosperity, we must also remind ourselves we are the party of fiscal responsibility and small government.

Stopping asylum seekers from working leaves taxpayers to foot the unnecessary bill, not just for the benefits paid out to people in the asylum system, but for all the lost income from tax and national insurance receipts.

The latest round of Immigration statistics shows the number of people waiting more than six months for a decision on their asylum claim at 62,000 – estimates suggest that this costs the Government more than £200 million a year.

We should not be frittering away that sort of money, especially as we must pay for all the state spending during the pandemic. When people from Ukraine enter our asylum system they, like other refugees who have been waiting months and years for a decision on their claim, will want to work. And we have decided that we will let them.

As Conservatives, we must extend this principle to others who find themselves stuck in limbo through no fault of their own.

Gerard Lyons: Sunak’s task tomorrow. The best way of reducing the deficit is to go for growth.

22 Mar

Dr Gerard Lyons is a senior fellow at Policy Exchange. He was Chief Economic Adviser to Boris Johnson during his second term as Mayor of London.

Rishi Sunak needs to provide context, actions and vision when he delivers his Spring Statement to the House of Commons this week.

Context, so that people can understand the present difficult economic environment and what lies ahead. Actions will be needed to cushion the imminent cost-of-living crisis. And the Chancellor needs to outline a vision, both from a domestic political perspective and to reassure financial markets and investors about the outlook for the economy.

The current context is a difficult one. The war in Ukraine and the associated high level of oil and commodity prices has added to uncertainty, both here in the UK and globally. This will be reflected in the economic forecasts from the Office for Budget Responsibility (OBR) that will accompany Sunak’s statement.

At the time of their previous forecast, last October, the OBR was forecasting growth of six per cent and inflation of four per cent this year. Now, depending upon their assumptions, the OBR’s growth forecast could be half and their inflation forecast almost twice as high as then. Hence the increased fear of stagflation – where inflation is higher, and growth lower.

For next year, the OBR will be expecting growth to slow further and inflation to ease. It is their cautious future growth outlook that limits the Chancellor’s room for fiscal manoeuvre. Sunak will also stress that higher inflation and interest rates increases the amount spent on servicing the national debt.

Despite this, the Chancellor should not feel constrained by the OBR’s forecasts into limiting the actions he can take. The margin of error for the budget deficit forecasts has been high in recent years – for obvious reasons, perhaps.

Importantly, the fiscal numbers, while poor, are clearly on an improving trend. During the first ten months of this fiscal year, public sector net debt was £138.5 billion, around half the level of a year earlier. So Sunak may have around £25 billion more to use in this statement than previously expected, and still be able to stick within his fiscal rules. He thus has the opportunity as well as the need to provide some help this week.

What then of the actions that can be taken? There are two areas he should focus on.

One is actions linked to the war, such as more immediate defence spending or help for refugees. The other is finding money to cushion the cost-of-living crisis.

While he may mention issues linked to levelling up and incentives to boost investment and improve skills, the bulk of tax changes and spending announcements linked to these will have to wait until the Budget in the autumn.

The imminent cost-of-living crisis is explained by higher inflation, rising fuel and energy bills, and increased taxes. The approach that the Chancellor is likely to take to address these is best captured by the three “t’s” – timely, temporary and targeted measures.

Even though people across all incomes, including the squeezed middle, are being impacted, help will be targeted to those on low incomes and most in need.

The rise in inflation is out of his control. But we shouldn’t pretend that no-one is to blame. Costs have risen across the board – initially because of supply disruptions triggered by the pandemic and now because of the war. At some stage these pressures will ease, but not yet.

But inflation has also risen because the Bank of England has been asleep at the wheel. Last year, when inflation was already rising, it printed an excessive amount of money as quantitative easing reached £895 billion. That made the inflation outlook worse, feeding inflation expectations.

The Chancellor can act on fuel duties. During the next fiscal year, fuel duties are expected to raise £28 billion. By comparison, income taxes will raise £229 billion and national insurance £182 billion. A bold step would be to suspend fuel duties completely for a period. But then the pain would be felt when reintroduced.

Indications are that fuel duty will be cut, perhaps for a temporary period. A similar approach has been seen recently in France and Ireland.

For example, take a litre of petrol at £1.65. This price includes fuel duty of 57.95 pence and VAT of 27.5 pence. So total tax is 85.45 pence

If fuel duty is reduced by five pence per litre, then, after taking into account VAT, this would reduce the price per litre by six pence, in this case from £1.65 to £1.59. A small but significant saving for many people.

A radical – but very unlikely – step would be to move environmental levies from fuel bills onto general taxation. From this April these levies on household energy bills will raise £9.2 billion over the fiscal year, around £325 per household per year. The importance of addressing climate change is critical, it is peoples’ ability to pay that is the issue. This leads onto the big issue that Sunak needs to address: taxes.

Two tax increases will bite this spring. There is fiscal drag: as pay creeps up it drags people into higher income tax brackets. Normally, this is addressed by allowing tax allowances to rise in line with inflation. Allowances have been frozen for a couple of years, so it is unlikely anything will change here.

The other tax is the increase in national insurance, which will rise for both workers and employers, and which comes into effect in a couple of weeks. For workers this rises from 12 per cent to 13.2 per cent, so someone earning £30,000 per year will pay £214 more and a £50,000 earner will pay £339 more.

In April 2023, this is replaced by a new health and social care level (which in all likelihood will rise in future years) and the national insurance rate falls back to 12 per cent.

There was no need for this tax to have been increased in the first place. It was already clear last autumn that the public finances were improving. Furthermore, it is a tax on jobs that it is coming into effect now when incomes are being squeezed.

Sunak appears keen not to reverse or delay this tax. Instead, he could raise the threshold at which national insurance is paid by workers. From April, national insurance is paid after you earn £190 per week. By contrast, the threshold for paying income tax is based on annual income but is equivalent to £242 per week.

The Chancellor also recently announced measures totalling around £9 billion to help people most in need. He could find other targeted help. For instance, benefits and allowances could be raised in line with latest inflation figures.

One lesson from following fiscal statements over the years is that, when it comes to chancellors, don’t just listen to what they say, watch what they do. During the pandemic, Sunak responded well. Further action is needed now.

Finally, despite uncertainty, it will be important for the Chancellor to outline a vision. The UK’s trend rate of growth is too low. The UK needs to become a more competitive economy. Sunak wants to reduce the budget deficit. That is understandable. His choices are: borrow, raise taxes, austerity via cutting spending, focus on boosting growth – or a combination of these.

Austerity is rightly ruled out, although public sector reform is needed. The trouble is that taxes are already high, even for people on modest incomes. The best way to reduce the deficit is to boost economic growth, allowing the ratio of debt to GDP to come down gradually, over time.

Peter Aldous: The cost-of-living crisis means Sunak simply cannot justify a cut to benefits

21 Mar

Peter Aldous is the Conservative MP for Waveney.

With reports of the appalling consequences of Russia’s invasion of Ukraine dominating the news, along with sobering predictions about the impact on energy costs, it is easy to forget that the cost-of-living crisis in the UK predates the conflict.

Inflation has been steadily rising since the middle of last year. The poorest in society, who spend the greatest proportion of their income on essentials, are most exposed to the increase in the cost of food, energy and other essentials. Following a decade in which benefits were frozen and cut in real terms, a growing gap between incomes and costs has become even more pronounced.

It goes without saying that the impact of the conflict in Ukraine on British citizens does not compare to that faced by the millions of Ukrainians whose lives have been thrown into terror and chaos. But neither can we ignore the significant economic impact the conflict will have on our constituents.

The impact on household budgets will be significant. Families already facing the most difficult circumstances must now bear further increases in the cost of heating their homes, feeding their families, and other essential costs. The terrible reality is that many are already going without the very basics and taking on debt just to get to the end of the month, along with all the worry and dread that comes with it.

While the Government has announced measures to support households with rising energy costs, they are no longer sufficient in scale or precision to reach those most at risk, covering only half of the average increase in energy bills and delivered in part via a loan which must be paid back.

In this context we must ask ourselves whether we can justify a real-terms cut to benefits in just a month’s time. Benefits are due to be uprated by just 3.1 per cent in April, based on inflation last September – which is less than half the rate of inflation now.

The independent Joseph Rowntree Foundation predicts that 400,000 people could be pulled into poverty by this real-terms cut, with nine million families who receive means-tested benefits becoming on average £500 per year worse off as a result.

However, these figures – which account for the Government’s already-announced package of support measures – are based on inflation forecasts of seven per cent. With oil and gas prices now spiralling upwards, inflation may now exceed this, with conservative estimates projecting it will reach eight per cent in April.

This real-terms reduction is being imposed on benefit levels that are already at too low a level. It is easy to overlook the fact that, prior to the pandemic-induced £20 uplift to Universal Credit, this benefit had been frozen for four years.

The value of our main out-of-work support has now been eroded to the point that it is wholly inadequate to protect families from harm. My voice was among those warning that the removal of this uplift last October was a mistake, because of the harsh impact it would have on the poorest in society. That impact is now even worse than feared.

Let us not underestimate the impact another cut to benefits will have on our constituents. There can be few who have not, at some point, considered the impact of the rising cost of living on their own situation over the last few months. But the anxiety felt by those on the lowest incomes is omnipresent.

As Conservatives, we believe in giving people the stable foundations on which to progress and thrive. We should recognise that an effective social security system is a crucial mechanism for delivering this, providing security and stability when events beyond people’s control create turbulence. When people’s lives are already often difficult and complex, can we really expect them to thrive if they are gripped by anxiety about how to keep warm and to feed their families?

In the Spring Statement, the Chancellor is likely to come forward with new measures to support people in the coming months, with a focus on the ‘squeezed middle’. Whilst he would be right to do this, we must not allow this to detract from the need to support those at the very bottom.

The scale of the harm to living standards for those on the lowest incomes should leave us very concerned. We have a responsibility to protect our constituents from the worst impacts of rising costs. Awareness of the real-terms cut coming down the track may not be widespread, but the impact on living standards in the current context could be far greater. Let us not make the same mistake again.

David Gauke: Higher Universal Credit, public sector pay, state pensions – perhaps some tax cuts. What Sunak should do next.

14 Mar

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the 2019 general election.

In nine days’ time, Rishi Sunak will deliver his Spring Statement. It was clearly his intention that it would be a relatively low-key event. The Office for Budget Responsibility would update its forecasts and perhaps a few reviews would be announced, but there would be little by way of big announcements on tax or spending policy. Spending matters were dealt with last October in the Comprehensive Spending Review, and tax announcements belong in a Budget – with the next one due in the autumn.

The Treasury likes having just one big fiscal event a year. It allows enough time for policies to be properly considered and it reduces the scope for other parts of Government to lobby for voter-friendly policies that cause havoc for the public finances. Sunak, wary of his Downing Street neighbour who is susceptible to such temptations, is likely to take the view that limiting this tiresome process to once a year is highly desirable. For one thing, it extends the period of time before the Prime Minister learns to spot the various Treasury tricks used to frustrate any attempt by outsiders at interfering in Budget matters.

The Chancellor was already under pressure to make the Spring Statement more substantial because of the cost of living squeeze. He pre-empted this with an announcement on a Council Tax rebate and loans on energy costs, and dug in on the forthcoming increase in national insurance contributions. We were heading for a tough spring, but it looked as if he could hold the line. And then came Russia’s invasion of Ukraine.

There are certain items of additional immediate expenditure necessary in response to the invasion that should not cause the Treasury too much difficulty. Additional emergency defence expenditure, including arms to Ukraine and NATO allies in the region; humanitarian aid for Ukraine and Ukrainian refugees; targeted interventions to expand domestic energy sources. There is a case (about which I suspect the Treasury is sceptical over the practicalities) for a big push over the next few months in improving home insulation.

It would be understandable if the Treasury’s focus is currently on what we need to do now, and address the more strategic questions later when the position with Ukraine has become clearer. The answer to such questions will almost certainly result in higher defence expenditure in the medium term, which will leave the Treasury with the headache of funding it. Both the long-term spending and the funding can be resolved at a later date.

Where it gets really difficult for the Treasury is the cost of living crisis. Before determining his policy response, the Chancellor will need to determine to what extent the crisis is the consequence of short-term, exceptional factors, such as this war, or whether it reveals that the cost of living is permanently higher than previously thought. If it is largely the former, the case for borrowing to intervene is stronger; if it is principally the latter, the case for taking those higher costs on the chin (preferably whilst protecting the most vulnerable) is increased.

We know that Sunak is a fiscal conservative. He will not consider it morally acceptable to subsidise current living standards at the expense of future generations in normal times. This is an important caveat. After all, Sunak the fiscal conservative is also the Chancellor who broke peacetime borrowing records in his first year in office. Needs must in exceptional circumstances.

There is a respectable argument to say that much of the squeeze in living standards is the consequence of high energy prices that stem from the invasion of Ukraine and our response to it; that this is the cost of economic warfare in a struggle in which we must prevail; and that future generations should not object to paying off debts incurred to combat threats to our way of life. In other words, protecting living standards now is to some extent analogous with creating a war debt.

The analogy only goes so far. We accumulated a lot of debt in two world wars and future generations did not resent it, but we also spent a great deal on defence during the Cold War during a period of time when debt generally fell as a percentage of GDP. Are we in a conflict lasting, at most, a few years or is this the new normal which may last decades? If the former, we can take a hit to our borrowing, if the latter we need to worry more about fiscal sustainability.

The situation is also complicated by the fact that much of the squeeze pre-dates the Ukrainian war. Energy prices were already high; living standards already set to fall. We are poorer than we previously thought, and that is unlikely to be immediately reversed, even if the Putin regime falls tomorrow and the Ukrainian conflict is quickly resolved. This suggests that we cannot avoid at least some hit to living standards,

A reasonable response would be to be willing to borrow to soften – but not eliminate – the squeeze in living standards. Higher increases in Universal Credit, the State pension and public sector pay than previously planned, perhaps some tax cuts (as many Conservative MPs are demanding), maybe an expansion of the council tax rebate scheme. Even taking into account that tax receipts have been higher than the OBR predicted in October, measures which only go half way to avoid falling living standards will see a deterioration of the public finances.

The Treasury then has two further complications.

First, inflation. The intention may be just to protect standards of living but borrowing more will constitute a fiscal stimulus at a time inflation is approaching double figures. This could result in the Bank of England increasing interest rates faster than would otherwise have been the case, which will impose further pressures on many mortgage-holders.

Economists differ on how big an inflationary problem we have and how far interest rates will rise (a further increase by the Bank of England is widely expected this week). Clearly, prices are rising quickly but higher commodity prices also take money out of the economy and suppress demand elsewhere. The risk is that we see stagnation – inflation and a stagnating economy as we saw after the oil shock of 1973.

The second problem is that temporary fiscal measures to address temporary cost of living pressures will have to be reversed when circumstances change. The experience of reversing the temporary UC uplift was a politically difficult one and, I suspect, has driven the Treasury to the bespoke council tax rebate scheme, which will be easier to drop in future. This might be good politics, but ends up with more complexity in our tax and benefit system.

All of this makes next week’s Spring Statement much more difficult than previously assumed. The briefing from the Treasury is that it is going to be policy-light, but I am sceptical. Domestic politics for the next few months will likely be dominated by the squeeze on living standards and inaction in the face of this will be unsustainable and politically perilous for the Chancellor.

Finding a response, however, that satisfies the public and Conservative MPs but does not further weaken the long-term outlook for inflation or the public finances may be Rishi Sunak’s greatest test yet. March 23 will be a big political moment after all.

Richard Robinson: Allowing asylum seekers to work is the most Conservative of policies

3 Feb

Richard Robinson is an Investment Manager, former European Parliamentary candidate and Chairman of Surrey Heath Conservatives.

At the heart of Conservative values is the belief that each individual should have the freedom to support themselves, and to go as far as their own efforts will take them.

When we enable people to do this, we achieve strong communities, a prosperous economy and a thriving United Kingdom.

For me, as a lifelong Conservative, it’s why banning asylum seekers from working and forcing them into welfare dependency is fundamentally un-Conservative.

I am not alone in this view, Conservative voters up and down the country, from the Blue Wall to the Red Wall, support change. In my own constituency of Surrey Heath, MRP polling estimates that 73 per cent of people want to let asylum seekers work.

The Labour government stripped asylum seekers of their right to work in 2002, instantly forcing thousands of people into a position where they had no option but to claim state support.

The Government says it will process most asylum claims within six months. The reality is rather different. The average waiting time for an initial decision on an asylum claim is between one and three years. And the situation is getting worse. Home Office data shows that the number of people waiting for more than a year for an initial decision increased almost 10-fold from 3,588 people in 2010 to 33,016 in 2020.

While cash support is available, it is set at £39.63 per person, per week. That’s just £5.66 a day for essentials such as food, sanitation and clothing.

This ban is a wholly un-Conservative policy. As a party, we believe that the State is a safety net, a hand up not a hand out. We know that work is better than welfare. We want people to ‘get on your bike’ to look for work. And yet for one group we make work illegal. The cruel truth is that in this case we have mandated that some people must live off benefits.

With increasing delays in the asylum system, the bill for housing and supporting people is mounting.

Some level of spending on support will always be necessary. We have, after all, a responsibility to make sure people in our asylum system, most of whom have valid claims for refugee status, do not become destitute and homeless.

But we also have a responsibility to minimise that cost by making the common-sense and hugely popular change to let people seeking asylum work.

The Lift the Ban Coalition, which includes economists, businesses, recruiters and trade unions as well as refugee charities, has calculated that allowing people seeking asylum to work could reduce the burden on the taxpayer by an estimated £181 million a year in increased tax and national insurance contributions, and a reduction in asylum support spending.

The UK is an outlier to Australia, Europe, the US and Canada in preventing people from working. Yet evidence from these countries shows work plays a vital role in helping people integrate better into their communities once they receive their refugee status.

Lifting the ban will allow them to become tax-paying, economically active members of society. Work would give asylum seekers the opportunity to meet and socialise, as well as provide a strong incentive to improve English language skills.

The ban means we leave asylum seekers prey to predators. Unable to work legally, they are tempted to work for below minimum wage in the black economy, or worse, for drug gangs or sex traffickers.

One issue Conservatives are rightly concerned about is the integrity of our borders. The claim is often made that allowing asylum seekers to work is a pull factor that will encourage migrants to choose the United Kingdom over other safe destinations. While fears around the right to work and increased asylum claims feel intuitive, they are in fact wholly unevidenced and discredited.

The Government’s own Migration Advisory Committee says a delay in access to the labour market does long-term damage to integration, and notes that there is no evidence that work rights would be a pull factor to the United Kingdom.

As we move forward from the pandemic we must give everyone the opportunity to succeed and contribute to this country, both economically and socially.

The time to act on this is now. The Nationality and Borders Bill presents an opportunity. Baroness Stroud has put her name to an amendment to the Bill that would give people the right to work. It strikes at the very core of our values as Conservatives and we should do all we can to make this happen.

Giving asylum seekers the right to work would allow them to support themselves financially, to meet their basic needs, lift themselves out of destitution and be afforded a basic level of dignity and autonomy. This is a Conservative policy change that is long overdue.