What’s the best way to tackle in-work poverty?

Alison McGovern MP chaired this week’s meeting of Labour for the Common Good group in Parliament – this is her report. You can read all reports of the meetings here.

Our tax credits victory in the House of Lords last week was a victory for British families. And given that the proposals were absent from the Tory election manifesto, it was a victory for democracy too.

This issue has been at the forefront of politics for some time. The Tories are worsening life for many people in Britain. And the debate on tax credits is the latest example of their casual attitude towards standard of living. They still haven’t committed to protecting the living standards of over 3 million families. We wait to see what the Chancellor can come up with on November. Can he turn back from his latest shambles?

Labour for the Common Good discussed the issue this week and our conversation was informed by presentations from two independent experts who both highlighted the importance and complexity of this debate.

On the one hand, Gavin Kelly, from the Resolution Trust, could not have been clearer that in-work poverty cannot be tackled without some form of state support for pay. Nearly all advanced economies have a version of tax credits and the idea that, for example, a proper living wage can do all the work is simply not credible given that it would have to be set at a dramatically higher level than today’s living wage in order to offset the losses of tax credits – and that would bring huge risks in terms of unemployment.

However, whilst Professor Jane Wills – a lecturer at Queen Mary University London and a key campaigner on the Living Wage – wholeheartedly agreed, she also made a strong argument about the ‘dignity of labour’. In her experience, she said, people “much prefer wages to state hand-outs”.

Naturally, this discussion brought up the issue of how Labour should respond to the Tory national minimum wage increases.

We know that the IFS’ distribution analysis shows that those in the lower half of the income distribution are losers from Osborne’s latest budget.

The Prime Minister and the Chancellor may think that they can spin their way out of the mess they have created, but the reality is increased child poverty and ever worsening family incomes.

Labour needs to think through a range of approaches to tackling this: dealing with the housing crisis, helping people move on in work, improving skills to build productivity, and confronting the costs of childcare.

Discussion also turned to what the next Labour government can do to help families build up assets, in order to tackle not just income inequality, but wealth inequality too.

But we need all the while to watch and scrutinise the Tories. Osborne’s rhetoric on high-skill high-pay labour market is just not matched by actual improvements in the prospects for those people targeted for cuts. We cannot let him forget this simple fact.

And in the end, the reality of what they are doing to families in our countries cannot be hidden by fine words.

Our job is to get a better plan, and one that meets the aspiration of working people: decent pay, coupled with help for children, to make sure a good family life is enjoyed by all.

Alison McGovern is MP for Wirral South.