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A Thornaby family's financial plight shows how the Government isn't working

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Last month I spoke to a woman on the doorstep in Thornaby about her issues and concerns and she explained the tough financial circumstances the family found themselves in. Her husband, the family’s breadwinner, was working for a firm which was struggling and were not paying out wages but had kept staff dangling for several months with unmet promises, while they continued to work.

I was very much struck by the situation and have been describing the family’s plight when speaking out about how the system – and indeed the economy -  is simply not working and needs reforming.

This week the woman, let’s call her Sue, has been back in touch with an update.

This is what she has said (I have changed a few small details to prevent her from being identified)

“I spoke to you recently when you knocked on my door regarding the fact we have had no income; I just thought I would update you and maybe you could come up with some suggestions for the Labour Party to put forward towards the next election as I think it’s too late to help us now. But with this current economic climate there will be a lot of people in our position in the near future. There seems to be a lot of help out there for the long-time unemployed but the short-term need help too. If you have the time please read what has happened in our case and maybe you can help people in the future...

My husband has worked since he was 16 and we have 3 children, other than claiming unemployment for 20 days a few years ago, he has always worked hard and paid tax and national insurance.

The firm he worked for has now closed down. We only got part of December’s wage, none of January and February and were notified in early March that the company had no money. After seeking advice and contacting our MP’s office we made a claim for Job Seekers Allowance and asked that they back date it. We contacted ACAS and CAB and the Administration Company. The Job Centre were unable to say if and when we could get any help. The Administration Company said we can only put in a claim but it is capped. It turns out that we can only claim about half of the money owed. And today we have received a letter concerning Job Seekers saying that we do not meet the requirements for having the claim backdated and the first three days don’t count, but after a date in mid March we can claim £112 per week to keep us all.

Steve has always worked hard and although he didn’t earn a lot, always paid tax, NI and bills etc and saved a little. Through no fault of our own he found himself in a situation of working for months without pay, being told he would get it next week, over and over. December 2013 he got part wages, it is now March 22nd and we haven’t had anything since. We had just over £1000 in savings which we used towards bills, we have borrowed from family and friends, we are overdrawn in the bank and owe nearly £3k on credit cards.

Steve has applied for numerous job vacancies and after an interview on Friday is expecting a job offer soon. By the time we are entitled to help from Job Seekers or anything else we will no longer be entitled to it because hopefully Steve will get a start date and sign off.

There seems to be help for the long term unemployed who rent but hard working people who want to buy a home and need help short term, maybe just for a few weeks every five or ten years have nowhere to turn.

I have cried more these last few months than in the whole of my life and I don’t think a penny off a pint or a bingo tax will help seeing as we don’t drink or gamble. One person would have to drink a hundred pints to save a pound yet this costs the Treasury a lot. It would have been better to put the beer up and use the extra income for something worthwhile. No-one minded Gordon Brown putting up beer or cigarettes because that few extra pence per item added up to a lot of extra income which he used to make life better for the many not just for the few...

Since the last election our standard of living has gone down and down. Things were getting harder even before the company closed because no-one had had a pay rise in five years and if Steve is offered this job he will be taking a £5000 pay cut from £25k per year down to £20k from which we will have to find a way of clearing the debt we have acquired over these few months.”

This is by no means the only case I have picked up on the doorstep which shows how inflexible our benefits system is. It simply doesn’t cater for any set of circumstances outside of a tight frame. I can only assume that Government relies on people’s friends and families being in a position to tide them over. I entirely sympathise with Sue where she explains that despite paying into the system for decades, it doesn’t wish to pay out when the safety net is needed.

I also met a man who is looking for work and was about to accept a job as a care assistant before understanding that it was a zero hour contract. This meant he might work some weeks and not others, but the benefits system is not capable of or flexible enough to manage people who need support only intermittently – and yet this is the new reality. Consequently he couldn’t take the job because he wouldn’t be able to guarantee to pay his rent or feed his child.

People have also talked to me on the doorstep about catastrophic company failures leaving people without work or pay. One angry man in Ingleby Barwick told me last summer about how his own transport company went bust and he had no-one to advise him or offer support when it was still just about viable. He said they could have kept afloat with an injection of cash to tide them over until cash flow improved and this would have saved lots of jobs. Instead he had to shut down and his lads all entered the system. Another man, in Bishopsgarth, told me how a business rates holiday would have helped his mechanics business in Stockton when times were hard.

I have several friends who have chosen not to claim benefits when finding themselves out of work for short periods because the system is too intransigent and difficult, too inflexible and unaccommodating, they prefer to take the financial hit, borrow and make-do until an opportunity comes along. You might be thinking that is a good thing, that it is better if people don’t claim or seek assistance, but the worry surely is that if people don’t feel the benefit of a National Insurance system then they will begin to resent paying into it and the whole support system will collapse (the clue is in the title after all!).

We need to do more as a country to support small businesses when they are struggling, a huge number of the nation’s workers are employed in SMEs in the private sector and although their collapse doesn’t necessarily mean thousands being thrown on to the dole as it would with a household name, they are still valued and valuable work places and we should be putting as much effort in there to keep them going as we would with a big employer. I have written elsewhere about the disappointing withdrawal of Business Link by this no-clue-about-business Government. And everyone knows the banks don’t do enough to help; that’s a particularly strong reason why a Regional Bank is such a good idea.

We also need to reform the benefits system so that it can reliably support people who only rarely need to call down money from the significant amounts they have paid in to the national pot; people who don’t fit neatly into categories but merit financial support which recognises their long-term contributions. Why can’t we support people like Sue and Steve? They are just as deserving.

And finally we need to reform the system so that it can flexibly meet the need where it is regularly intermittent (if that is not an oxymoron) and where people need to be able to claim income support some weeks but not others. The three day “pay nothing” measure wont work for people like this.  And of course we need to get rid of those horrible zero hour contracts.

I shall be feeding this contribution into Labour’s manifesto planning process.

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