Labour knows the value of work and what working people need to succeed

Jonathan Reynolds
© David Woolfall/CC BY 3.0

As we emerge out of this pandemic, our central challenge must be to end the inequalities so cruelly exposed by the crisis. Now must be the moment to offer people real hope, and optimism, for the future. Through our new deal for working people, Labour will do exactly that. Labour is the party of working people – be that self-employed or contracted, public or private, it is for us to fight for good work for all. For us, good work means a job you can raise a family on, hours you can count on and a wage that properly supports you.

It is simply unacceptable that people working full time or working multiple jobs are still struggling to make ends meet. How can the government claim to be at the helm of a functioning economy when one in eight workers in the UK are in poverty? Or when the existence of food banks has become the norm throughout the UK? Or when millions of children in working households are living in poverty?

It is clear our economic model is broken. A new deal for working people cannot be about a few minor tweaks around the edges, it is about fundamentally changing our economy so that working people have the dignity and security they deserve from their job. That’s why Labour will increase the minimum wage immediately to £10 an hour, ensure sick pay for everyone, protect workers against unfair dismissal and give all workers the right to flexible working.

It also means creating high quality jobs and apprenticeships. Labour has a plan to create 400,000 jobs in new industries, making and selling more in Britain and ensuring a jobs promise for those at risk of long-term unemployment.

Essential to Labour’s new deal for working people is to ensure people have jobs that they can raise their family on. We cannot have a flourishing economy without an adequate social security system. Low pay, insecure work and a broken social security system are all holding our economy back.

2.3 million people are in work and claim Universal Credit. Despite the rhetoric from the Conservatives over the last decade, for some people Universal Credit has increased, not reduced, the barriers to them working more hours. At present, the way Universal Credit works can mean there is little financial benefit to taking on more hours or working full time because of how the taper rate operates. For every pound that someone on Universal Credit earns through work, they lose 63p from their Universal Credit entitlement from the taper rate. And that is before income tax and national insurance are taken into account.

This means a single parent working 30 hours a week on the minimum wage loses over £570 every month from their Universal Credit. Under the current system, that parent has an effective marginal rate of tax far higher than that of our Prime Minister. When a huge chunk of your income gets taken by the taper rate, you don’t earn enough to warrant more hours. And when you factor in extra costs like transport and childcare, many people might be worse off by working more.

That’s why, today, I have pledged that the next Labour government, as part of our commitment for a new deal for working people, will reduce the taper rate when we replace Universal Credit so that people can keep more of what they earn.

As we come out of the pandemic, we have a huge opportunity, and a responsibility, to put right what was going wrong before. We oppose the government’s decision to cut Universal Credit from October this year. And we want to go beyond that and replace Universal Credit. When we do, we’ll make sure that low-paid people can work the hours they need and keep more of the money they earn.

I firmly believe our social security system can support a labour market that works for working people. A system that gets you back on your feet, is there for you in hard times, but doesn’t trap you in a job that doesn’t pay enough. We cannot build a fairer more compassionate economy without replacing Universal Credit with a system that works, and that values work.

The divide between Labour and the Conservatives is clear. They want to take £1,000 off working families next month, Labour wants to help families earn and keep more money. Because Labour knows the value of work and what working people need to succeed.

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