I DON’T doubt that the Prime Minister’s noble vow to help the “JAM” families is well-meaning. She has identified a group, estimated at six million working families, whom she deems especially deserving of Government support.
Her policy is based on criteria established by the non-partisan think-tank The Resolution Foundation. To be a JAM – or “just about managing” – your household income could be up to £50,000, but it could be topped up by benefits such as tax credits.
This sounds like a lot, but perhaps it is stretched to the limit because you have several children. Your household savings add up to less than a month’s wages. Two decades ago, you probably owned your own home, but now you are much more likely to rent.
Mrs May asked her Chancellor, Philip Hammond, to pay especial attention to helping such families in his Autumn Statement. My ears pricked up. On several counts at least, they were talking about me.
However, unless I have missed something, the main thing Mr Hammond has to offer is a plan to increase the tax-free allowance on earnings to £12,500 in the next four years, starting at £11,500 in April. At the same time, he will also increase the National Living Wage to the princely sum of £7.50 an hour.
Here we begin to enter the problem that dare not speak its name. There is much debate about what constitutes “a living wage” and of course the cost of living – especially housing and public transport outlay – varies around the country. However, it is one thing to headline a “living wage”, quite another to ignore the process by which this wage might be earned.
While Mrs May and Mr Hammond have been busily doing their sums, they have ignored the fact that millions of people do not just lack long-term job security, but they have no guarantee what they will be earning week to week. Thanks to the punitive “zero hours” contracts instigated by many large employers, their income can fluctuate widely.
Sharp practices in the workplace are a major cause of financial strain for those families the Government so worthily seeks to help. Have you ever tried to keep on top of tax credits when your income varies week by week, month by month?
I have lost count of the parents I have spoken to who have ended up losing out – or owing the Government hundreds of pounds – because they can’t report a standard monthly income. My own earnings, as I am self-employed, are so random I gave up filling the forms in for my two children years ago. There will be millions more like me who could be missing out, because the hassle and uncertainty is simply not worth it.
It’s all very well making grand gestures, but unless a way is found to tackle such thorny issues, politicians will set about their headline-grabbing idealism with one hand tied behind their back. Thus far, no politician has dared to enter the murky world of the labour market and set down a list of fair ground rules.
I do wonder overall how those in the Westminster world join the dots. Does Philip Hammond not realise for instance, that in families where household incomes are balanced on a knife edge, a measure such as increasing the insurance premium tax can send things into freefall?
The plan to increase this levy from 10 to 12 per cent will impact on the cost of insurance policies for homes, contents (and cars) and turn the provision of cover into an unaffordable option for many. I already know plenty where these most basic security measures are simply beyond means.
Can you imagine the potentially catastrophic effect of a broken door lock or a leaking roof on a family with no insurance and no savings? In too many cases, there is no recourse but to visit the payday lender or modern-day pawn shop to obtain the money to sort the problem out.
Why do you think so many of these establishments line our High Streets? And why do you think that British households overall are labouring under the highest levels of personal debt in Europe? It is certainly not because everyone is busting their credit card limits on fancy holidays and expensive cars; research by comparison website TotallyMoney.com recently found that as many as one in five consumers resort to paying household bills on the plastic.
All this should make sobering reading, but do you know what the really sad truth is? In many towns and cities in our region, those workers struggling on zero hours contracts consider themselves the lucky ones. There is another group who remain below the radar.
These are the ones who live in places where any job is scarce, where housing is left to rot by greedy landlords, where energy debt has led to the forced installation of ruinously-expensive “pay-as-you-go” meters and where a trip to the food bank is the only way to feed your children.
I didn’t hear much about this group in the Autumn Statement. What the Government must understand is that their numbers are made up of those who have failed to manage at all.