House of Commons

Tuesday 8th January 2013 Commons Chamber

Tuesday 8 January 2013

The House met at half-past Eleven o’clock

Prayers

Tuesday 8th January 2013 Commons Chamber

[Mr Speaker in the Chair]

Business Before Questions

Canterbury City Council Bill (By Order)

Motion made, That the Lords amendments be now considered.

[Hon. Members]

Object.

Lords amendments to be considered on Tuesday 15 January.

Leeds City Council Bill (By Order)

Motion made, That the Lords amendments be now considered.

[Hon. Members]

Object.

Lords amendments to be considered on Tuesday 15 January.

Nottingham City Council Bill (By Order)

Motion made, That the Lords amendments be now considered.

[Hon. Members]

Object.

Lords amendments to be considered on Tuesday 15 January.

Reading Borough Council Bill (By Order)

Motion made, That the Lords amendments be now considered.

[Hon. Members]

Object.

Lords amendments to be considered on Tuesday 15 January.

City of London (Various Powers) Bill [Lords] (By Order)

Second Reading opposed and deferred until Tuesday 15 January (Standing Order No. 20).

Oral Answers to Questions

Tuesday 8th January 2013 Commons Chamber

The Deputy Prime Minister was asked—

[Ian Murray (Edinburgh South) (Lab)]

1. When the Government plan to bring forward proposals on the recall of hon. Members.

[The Deputy Prime Minister (Mr Nick Clegg)]

Happy new year, Mr Speaker.

The Government published our proposals on the recall of MPs last year, and the Political and Constitutional Reform Committee then published its report in June last year. We submitted an interim response reaffirming our commitment to establishing a recall mechanism and are now taking the proper time to reflect on the Committee’s recommendations.

[Ian Murray]

Happy new year, Mr Speaker. I thank the Deputy Prime Minister for that unvarnished answer. Given that one of the justifications for introducing recall is improved confidence in our democracy, what is his view of the Political and Constitutional Reform Committee’s statement:

“We are not convinced that the proposals will increase public confidence in politics”?

[The Deputy Prime Minister]

The Committee made a number of recommendations about our proposals, but equally it accepted that all parties had made a manifesto commitment to introduce some kind of recall mechanism and acknowledged, as I think everyone does, the difficulty in trying to define serious wrongdoing precisely and determine who should define it and who should set off a trigger for a recall by-election. It is precisely those kinds of difficult dilemmas that we are now trying to address, because we do not want to resile from the commitment to legislate to introduce some kind of recall mechanism.

[Jim Dobbin (Heywood and Middleton) (Lab/Co-op)]

2. What his policy is on the review of parliamentary constituency boundaries.

[Mr Iain McKenzie (Inverclyde) (Lab)]

4. What his policy is on the review of parliamentary constituency boundaries.

[The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith)]

The boundary commissions are continuing with the boundary review in accordance with the legislation that requires them to report before October 2013.

[Jim Dobbin]

Yesterday’s coalition renewal document, “The Coalition: together in the national interest”, includes a vote on the boundary change proposals for constituencies. I know that the Minister is to answer, but I would like to know whether the Deputy Prime Minister will campaign for a no vote.

[Miss Smith]

I think that the parties within the Government have made their positions clear on the matter. As the Prime Minister said yesterday, there will be a vote, it will take place, and I suppose that is that.

[Mr McKenzie]

Does the Minister believe that it is right to redraw parliamentary boundaries on the basis of data from which millions of eligible voters are missing?

[Miss Smith]

It is the Government’s intention to proceed with the individual electoral registration programme, which will increase and improve the accuracy of the registers we work with. It is really important that we all continue with the support that there is across the House for those proposals.

[Mr Christopher Chope (Christchurch) (Con)]

Can my hon. Friend guarantee that the next general election will be fought according to the new parliamentary boundaries recommended by the Electoral Commission, and that it will be fought with individual voter registration?

[Miss Smith]

I think that the answer to my hon. Friend is best given within the point that there will be a vote on those proposals, as I think he knows. On individual electoral registration, I can confirm that the programme is proceeding as planned, and I am happy to give him further details on that.

[Dr William McCrea (South Antrim) (DUP)]

If the Lib Dems are still voting against the recommended parliamentary boundary changes, should this House not have the earliest opportunity to vote on the issue, thereby possibly saving unnecessary public expenditure at a time when the public finances are limited, and when should such a vote take place?

[Miss Smith]

I am terribly sorry to be boring, but there will be a vote on those proposals.

[Jessica Morden (Newport East) (Lab)]

3. What steps the Government are taking to ensure that under-represented groups are included on the electoral register.

[The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith)]

As I mentioned in my previous answer, it is important that we ensure that all those who should be are included on the electoral register, including the under-represented groups to which the hon. Lady’s question refers.

The Government, politicians, parties, electoral administrators and plenty of others have a role to play in encouraging people to register to vote. The Government are committed to doing all they can to maximise registration, including among under-registered groups. They are looking to modernise the system to make it as convenient as possible and are running various sets of data-related pilots to find out how we can best identify unregistered groups and add them to the register.

[Jessica Morden]

Does the Minister agree that the annual canvass is a really important part of ensuring that under-represented groups are on the register and that any attempts to water down the frequency of the canvass, or give powers to Ministers to abolish it altogether, should be avoided?

[Miss Smith]

Our current plans for electoral registration do include the annual canvass, which will continue to be used for as long as it remains the best way to ensure that the register is as complete and accurate as possible.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Will the Minister clarify what penalty, if any, will be imposed on those who fail to return an individual electoral registration form?

[Miss Smith]

There will be a set of penalties that relate to those actions. I will be happy to write to my hon. Friend so that he gets the fullest possible detail.

[Nick Smith (Blaenau Gwent) (Lab)]

14. When does the Minister expect a national online electoral registration system to be in place?

[Miss Smith]

Many Members take an interest in that issue. I do not have a specific date to give the hon. Gentleman. The Government are looking at the matter and I shall be happy to discuss it further with him.

[Sadiq Khan (Tooting) (Lab)]

We all want a register that is complete and accurate. The Electoral Commission’s recent damning report on the move to individual voter registration in Northern Ireland is extremely worrying, yet the Government have decided to speed up the implementation of individual voter registration and to remove the safeguards that Labour put in place.

All this is happening at a time when local authorities are having to make record cuts, including to the amount that they can devote to electoral registration. Given the criticism levelled by the Electoral Commission’s report, what extra are the Government considering to avoid a repeat in the rest of the UK of the experiences in Northern Ireland, which could see millions of eligible voters dumped off the electoral register?

[Miss Smith]

I think the right hon. Gentleman is misrepresenting some of what the report says. The evidence from the report is that continuous registration is working for the majority of the population in Northern Ireland. The report notes that many of the key lessons from the experience in Northern Ireland have already been addressed by the proposals. It also states:

“The findings from this research do not undermine the principle of individual electoral registration or mean that the introduction of this system in Great Britain will necessarily lead to similar declines in accuracy and completeness.”

[Mr Mark Williams (Ceredigion) (LD)]

5. What assessment he has made of the work of the Commission on Devolution in Wales.

[Glyn Davies (Montgomeryshire) (Con)]

6. What assessment he has made of the work of the Commission on Devolution in Wales.

[The Deputy Prime Minister (Mr Nick Clegg)]

On 19 November, the Commission on Devolution in Wales delivered a thorough and clear analysis of the options for fiscal devolution in Wales. The Government welcome publication of the Commission’s report and will respond formally in due course.

[Mr Williams]

I thank my right hon. Friend for that answer, and I welcome his welcome for the work of the Silk commission. We have an opportunity to enable our Assembly to be truly accountable—not just for the money that it spends by way of the block grant, but for the money that it raises through taxes, through a partial devolution of income tax. Surely that would be an important facet of a strengthened and accountable National Assembly. Will my right hon. Friend guarantee that part 1 of the Silk recommendations will be enacted in legislation during this Parliament?

[The Deputy Prime Minister]

I can certainly confirm that we will respond in full well before part 2 of the Silk commission proceedings is concluded. We aim to provide our full response to part 1, about the fiscal aspects of further devolution to Wales, by spring this year.

I strongly agree with my hon. Friend’s praise for the report, which is thorough and thoughtful. It is radical; it suggests devolving up to about a quarter of total money spent in Wales to the Welsh Assembly itself. It actually goes further in important respects, notably on varying income tax rates, than the Calman-like process on which it was modelled.

[Glyn Davies]

The Silk commission recommended that the National Assembly for Wales should become more financially accountable through being given responsibility for raising tax. Does my right hon. Friend believe that this can happen only after a referendum takes place to secure the support of the Welsh people, even if a firm commitment is made in the manifesto of the party or parties that form the next Government?

[The Deputy Prime Minister]

As my hon. Friend knows, the Silk commission has on it representatives of all four parties in the Assembly, and it was a unanimously supported recommendation that the change in income tax recommended in part 1 should be implemented only once a referendum had taken place. Obviously, we will look at this very closely. We are acutely aware that it represents a cross-party approach within Wales itself.

[Kevin Brennan (Cardiff West) (Lab)]

Have the Deputy Prime Minister and the Government considered a floor to the Barnett formula to ensure that Wales does not lose out?

[The Deputy Prime Minister]

As the hon. Gentleman may know, back in October the Chief Secretary to the Treasury made it clear that we would work with the Welsh Administration to look at the convergence or, as is the case at the moment, divergence of funding in Wales and elsewhere in the United Kingdom. We have also made it clear that while there is a legitimate debate around the future of the Barnett formula, our priority remains the stabilisation of the public finances.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

Given the need for change, supported by all parties on the Silk commission, and the Deputy Prime Minister’s enthusiasm, together with that of his party, will he make every effort to ensure that part 1 of Silk is legislated on during this Parliament?

[The Deputy Prime Minister]

As I said, we all need to take a careful look at part 1 and take a collective decision within the coalition Government on how we respond to it. As Ministers in all parts of the coalition have said, it is an extremely thorough and thoughtful piece of work representing a cross-party approach in Wales, and we will respond to it with similar seriousness before the spring of this year.

[Stephen Mosley (City of Chester) (Con)]

Has my right hon. Friend given any consideration to communities that straddle the Anglo-Welsh border—for instance, the Chester economic sub-region, including north Wales and Chester—and the impact that this will have on people who live and work on both sides of the border?

[The Deputy Prime Minister]

My hon. Friend has identified one of the issues that makes some of the tax recommendations in part 1 of the Silk commission slightly more complicated in certain respects than the devolved tax arrangements in Scotland, principally because the border area between England and Wales is more populous than the border areas between Scotland and England. That is one of the things that we are seeking to address right now in our internal deliberations.

[Wayne David (Caerphilly) (Lab)]

In the very slim mid- term review, a commitment is given to the Government’s responding to the Silk commission, as the Deputy Prime Minister has confirmed this morning. Will he give a commitment that there will be no unilateral reduction in the block grant to Wales?

[The Deputy Prime Minister]

I think we have done better than that. As the hon. Gentleman knows, back in October the Chief Secretary to the Treasury made it clear that we would work with the Administration in Cardiff before each public spending review to monitor the convergence or divergence between the funding settlements in both places. This commitment has not been made by previous Governments here in Westminster. That is a demonstration of our willingness to respond to some of the concerns about the future funding arrangements within the United Kingdom, particularly as they affect Wales.

[Mr Graham Allen (Nottingham North) (Lab)]

7. Whether he plans to examine the balance of power between local and central Government.

[The Deputy Prime Minister (Mr Nick Clegg)]

The Government are clear that we must disperse power in our society. That is why we have initiated a historic shift away from Westminster to put our counties, cities, towns, villages, neighbourhoods and citizens in control of their own affairs. I look forward to seeing the final report on the relationship between local and central Government from the hon. Gentleman’s Select Committee inquiry as we continue the process of reform.

[Mr Allen]

The Deputy Prime Minister will know that three out of the four nations within the United Kingdom now enjoy some form of devolution; the one that does not enjoy any devolution, effectively protected by statute, is England. Will he engage with local government at the right moment to discuss how devolution can be made effective through local government, and will he also engage with the Select Committee, which is due to report on this very matter at the end of this month?

[The Deputy Prime Minister]

I certainly stand shoulder to shoulder with the hon. Gentleman on his long-standing critique of the over-centralisation of power in Westminster and Whitehall. I know that he has welcomed some of the initiatives that we have taken. They do not provide all the answers, but they are significant steps in the right direction. The retention of 50% of business rates by local authorities is probably the biggest act of fiscal decentralisation in England for several years. The city deals, in my view, are a radical template of a wholesale transfer of responsibilities, ranging from transport and capital investment to skills and training, to local authorities. The question that the hon. Gentleman’s Committee is posing is whether that can be done in a more systematic, neat and formalised way, and I am certainly open to look at any suggestions in that respect. It is the tradition in this country to do things in a slightly more informal and uneven way, but his Committee’s report will be taken very seriously by us in government.

[Robert Halfon (Harlow) (Con)]

Can my right hon. Friend set out what powers have been devolved from central Government to the big society?

[The Deputy Prime Minister]

As my hon. Friend knows, whether it is in planning, control over business rates, significant powers over skills, transport and capital investment in our cities or in the enactment of a general power of competence—whereby we recognise in law for the first time the general power of competence for local authorities—I believe that, in all of those areas, as well as, of course, the new referendum powers available to local neighbourhoods and local authorities, we have made a significant step towards creating a more decentralised nation.

[Paul Burstow (Sutton and Cheam) (LD)]

T1. If he will make a statement on his departmental responsibilities.

[The Deputy Prime Minister (Mr Nick Clegg)]

As Deputy Prime Minister I support the Prime Minister on the full range of Government policy and initiatives. Within Government I take special responsibility for this Government’s programme of political and constitutional reform.

[Paul Burstow]

Yesterday the Government, in their mid-term review, reaffirmed their commitment to the principles of a cap and reform of means-testing to end the care lottery in this country. Will the Deputy Prime Minister now go further than just considering principles and commit this Government to introducing legislation, through the draft Care and Support Bill, during the life of this Parliament to give effect to that cap and give people the peace of mind they deserve?

[The Deputy Prime Minister]

I can confirm that in the coming weeks we will publish our detailed response, which will address the issue of how to avoid individuals and households having to face catastrophic costs in funding their care. We have said all along that we believe in the principles and the basic model set out by Andrew Dilnot. Of course there is an issue about how to pay for this in the future, but as my right hon. Friend has rightly identified, the first step is to enshrine that approach in legislation, which we will seek to do during this Parliament.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

If the Deputy Prime Minister votes for the Welfare Benefits Up-rating Bill tonight, he will be voting to make millions of low-income families worse off. Will he confirm that two thirds of the people who will be hit by the Bill are not lying in bed with the curtains drawn—which, anyway, is no way to speak about unemployed people—but are actually in work?

[The Deputy Prime Minister]

It is obvious that a measure that deals with both out-of-work benefits and tax credits affects people both in and out of work. The challenge for the right hon. and learned Lady and her colleagues is to explain to this House and the British public, first, why she could support a 1% limit on the pay increases for doctors, nurses and teachers in the public sector, but not take exactly the same approach in this area, and secondly, where she is going to find the £5 billion that this measure will save over the next three years. Would she take it from the NHS? I know that Labour’s health spokesperson thinks that increasing spending on the NHS is irresponsible. We do not. Would she take it from schools? Would she take it from social care? Those are the kinds of answers that this House deserves from the Labour party before the vote takes place tonight.

[Ms Harman]

Even the right hon. Gentleman should be able to work out that 1% if someone is earning more than £100,000 a year is a great deal more than 1% if someone is struggling on a low income. His Government are failing on the economy—that is why they are borrowing £212 billion more than they had planned.

On fairness, will the right hon. Gentleman admit that tonight’s vote will mean that, while someone earning more than £1 million a year will be better off by £2,000 a week because of their tax cut, a working couple on tax credit will be worse off because their increase of 38p a week will be wiped out by inflation? The Government have failed on compassion as well as on competence, so why will he not vote with us against the Bill tonight?

[The Deputy Prime Minister]

The biggest tax measure, which will benefit more than 20 million basic rate taxpayers, is about to take place in April. A two-earner household on the basic rate of tax will be £1,200 better off because we are increasing the tax allowance by the largest amount ever. I would have thought that the right hon. and learned Lady would welcome that. It means that someone on the minimum pay will have had their income tax slashed by half.

On the upper rate of tax, the right hon. and learned Lady’s party makes great play of the 50p rate. It is worth putting it on the record that the 50p upper rate of tax existed for only 36 days of the 13 years that her Government were in office. I know that they had a deathbed conversion to the 50p rate, but they pretend that they were believers all along. Actually, the upper rate of tax under Labour was 40p. Under this Government, it will be 45p. Justify that!

[Stephen Mosley (City of Chester) (Con)]

T5. Like many hon. Members, I read the mid-term review with great interest. Much of it is welcome, but I was concerned by the line on page 32 that states that“provision is made for Liberal Democrat MPs to abstain on proposals to introduce transferable tax allowances for married couples.” Why will the Deputy Prime Minister not support that common-sense proposal, which would help hard-working families across the country?

[The Deputy Prime Minister]

As the hon. Gentleman knows, that is a carbon copy of the wording in the coalition agreement. My party has always taken this stance because I have always struggled to explain to people why someone who happens not to be married should pay more tax than someone who happens to be married. If such a measure were put before the House, it would be very difficult to explain to people why those who are not married should be stung with higher tax. That does not seem to me to be right.

[Kerry McCarthy (Bristol East) (Lab)]

T2. When the Deputy Prime Minister entered the coalition, did he foresee that at the halfway stage there would be a sixfold increase in the number of people using food banks, there would be predictions that half a million more children would be living in absolute poverty by the end of the Parliament and that he would champion legislation described by the Child Poverty Action Group as “poverty-producing”, as he will later today? Is he not thoroughly ashamed of his record?

[The Deputy Prime Minister]

I am proud that this coalition Government have come together to clear up the monumental mess left by the hon. Lady’s party. After all, it was her shadow Chancellor who went on the prawn cocktail charm offensive in the City of London to suck up to the banks, which created the problems in the first place. It was the Labour Government who presided over the shocking tax system in which a hedge fund manager paid less tax on their shares than their cleaner paid on their wages. It is this coalition Government who have ended that scandal.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

T6. I congratulate my right hon. Friend on bringing forward legislation on the succession to the Crown. However, does he think that it is necessary to push it through in one day as if it was emergency terrorism legislation, when Parliament has a job to do to ensure that it is correctly drafted and that any concerns or unforeseen difficulties are addressed properly?

[The Deputy Prime Minister]

Making a small, concise amendment to an Act that has been on the statute book since 1701 is hardly acting hastily.

[Chris Bryant (Rhondda) (Lab)]

1700.

[The Deputy Prime Minister]

I am being corrected by the historians on the Opposition Benches. None the less, this is something that has been on the statute book for more than 300 years. Let us remember that this is a very specific act of discrimination against one faith only. The heir to the throne may marry someone of any religion outside the Church of England—Muslim, Hindu and so on—but uniquely not a Catholic under the terms of the Act of 1700 or 1701. This is a precise change and it is being co-ordinated precisely with all the other realms that have to make the identical change in their legislation.

[John Mann (Bassetlaw) (Lab)]

T3. The last former East Midlands MEP, who had a radio show, soon disappeared into political oblivion. When will the Deputy Prime Minister give the voters of Sheffield, Hallam the opportunity to vote on recalling him?

[The Deputy Prime Minister]

It is always a pleasure to answer the hon. Gentleman’s somewhat incoherent but none the less punchy questions. I do not want to disappoint him, but I am afraid there are not millions of people hanging on his every word spoken in the Chamber. I think that as politicians, we should go out to be where people are rather than expect them to come where the politicians are. I make no apology for making myself available to members of the public on the radio or in town and village halls up and down the country, as I do every week.

[Andrew Bridgen (North West Leicestershire) (Con)]

T8. Given the huge distortions in the current parliamentary boundaries, does the Deputy Prime Minister really believe that by reviewing boundaries only every eight to 12 years we will have a fair and unbiased electoral voting system?

[The Deputy Prime Minister]

As I have said before, my own view, in light of the events that have disrupted the package of political reforms to which the coalition Government had committed in the coalition agreement, is that we should delay the implementation of the next set of boundary reviews by a full parliamentary cycle.

[Mr William Bain (Glasgow North East) (Lab)]

T7. Support through the tax system for families in Scotland with their child care bills amounted to a miserable 1p a day in the past year, and the Resolution Foundation says that half the benefit of the Deputy Prime Minister’s current voucher plan for child care goes to people in the top fifth of the income bracket. Is he not going to have to do a lot more than his complete absence of plans yesterday to prevent the second half of the coalition from being as big a disaster for families’ child care costs as the first half?

[The Deputy Prime Minister]

I am slightly surprised that the hon. Gentleman is commenting in detail on plans that have not been published yet. We have not yet finalised the details of our new investment in support for families facing high child care costs, but we will do so in the weeks to come. I point out to him, though, that it is this Government who have introduced 15 hours of free pre-school and child care support for every three and four-year-old in this country, which no Government have done before. It is also this Government who, from this April, for the first time ever, will be providing 15 hours of free pre-school and child care support to two-year-olds from the most disadvantaged families in this country. Government Members are proud of that.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

Why is the fact that an Act has been in existence for more than 300 years an argument for amending it, together with the Bill of Rights and the Act of Union with Scotland, in a single day? I would have thought the argument was very much in the opposite direction.

[The Deputy Prime Minister]

As I sought to explain to my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) earlier, we are removing one specific, highly discriminatory provision from the law, on the faith of people whom heirs to the throne may marry. That discriminatory provision was introduced in the early years of the 18th century in response to the activities of Louis XIV of France, and I simply do not think it is necessary now in 21st century Britain.

[Ian Murray (Edinburgh South) (Lab)]

T10. The Deputy Prime Minister is starting to have the same trait as the Prime Minister of not answering questions. May I try again? Is it not the case that after the vote this evening, 3,900 people in my constituency who claim in-work benefits and do the right thing will be worse off while millionaires get a tax cut of £2,000 a week?

[The Deputy Prime Minister]

As I said before, the Labour rate for top taxpayers was 40p, so the hon. Gentleman needs to justify his support for 13 years for a lower rate applied to millionaires than will be introduced—[Interruption.] I know Opposition Members do not like it, and they are shrieking at the top of their voices, but the record shows that for the whole time of the Labour Government, apart from 30 days towards the end, the upper rate was 40p. We are introducing an upper rate of 45p. That is the first point.

The second point is that I hope the hon. Gentleman would celebrate with his constituents the fact that as of April this year, every single basic rate taxpayer in his constituency will be £600 better off because of the changes in the income tax allowance that we have introduced since the general election.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

T9. There is no doubt that the Government have to make some tough decisions, but what comment would my right hon. Friend make on the overall impact of Government policies on social mobility?

[The Deputy Prime Minister]

One thing we have learned is that if we could shift social mobility by pouring billions of pounds into the tax credit system—the Labour party’s approach—that would have worked a long time ago. In fact, despite a huge transfer of money through the tax credit system, social mobility barely budged during 13 years of Labour government. That is why we are investing more in early years initiatives and providing more child care support, and why we are giving more support to two, three and four-year-olds and—most importantly—providing £2.5 billion through the pupil premium to help the education of the most disadvantaged children in the country. We believe that that is the way to promote social mobility over time.

[Mr David Hanson (Delyn) (Lab)]

T13. The Labour-controlled Welsh Assembly is not implementing tuition fees, and Liberal Democrat Assembly Members support that. Does the Deputy Prime Minister agree with his Liberal colleagues in Wales?

[The Deputy Prime Minister]

We have a devolved approach to higher education in both Wales and Scotland. Under the new system introduced in England—unlike that over which the right hon. Gentleman presided during Labour’s time in office—students will not pay any up-front fees at all. That includes thousands of part-time students who for the first time do not need to pay any up-front fees. Because of the way we are introducing what is, in effect, a time-limited graduate tax, all graduates will pay out less from their bank account every week and month—even if for longer—than they did under the system introduced by Labour.

[John Stevenson (Carlisle) (Con)]

T11. I welcome the second wave of city deals for the next 20 largest cities, but what about smaller cities such as Carlisle? Will the Deputy Prime Minister confirm that they too will have the opportunity to reach a deal with the Government to have increased powers devolved to them?

[The Deputy Prime Minister]

As my hon. Friend will know, the first wave of city deals applied to the eight biggest cities. We then invited 20 cities and communities to submit bids for the next wave, on which we hope to decide in the coming months. I very much hope that the city deals will not be just a one-off experiment in devolution but that they will act as a template for further devolution across the country.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

The coalition agreement states that the Government will introduce

“extra support for people with disabilities who want to become MPs, councillors or other elected officials.”

Will the Deputy Prime Minister update the House on progress with that?

[The Deputy Prime Minister]

As the hon. Lady may know, there is a £2.6 million access to elected office fund, and the wider access to elected office strategy was launched in July last year to deliver on the coalition agreement commitment to provide extra support to tackle the obstacles she mentions. The fund will be open for applications until the end of March 2014, and so far there have been 11 applications, including from independent candidates.

[Mr Andrew Turner (Isle of Wight) (Con)]

Can the Deputy Prime Minister assure the House that the Succession to the Crown Bill will give the public confidence that the relationship between Church and state will be unaltered, even if a future monarch should marry a Roman Catholic and the ensuing child is a Catholic?

[The Deputy Prime Minister]

I can give the hon. Gentleman complete reassurance that the provisions in the Bill will not in any way alter the status of the established Church in this country and the monarch as head of that Church. We have had monarchs who have married Catholics. I think Queen Anne of Denmark was married to James I of Scotland—I may be corrected by our historian, the hon. Member for Rhondda (Chris Bryant), from a sedentary position. There is absolutely nothing in the provisions that will alter the status of the Church in the way feared by the hon. Member for Isle of Wight (Mr Turner).

[Andrew Gwynne (Denton and Reddish) (Lab)]

The coalition agreement commits the Government to the appointment of new peers to create a second Chamber that is more reflective of votes cast at the 2010 general election. Is the Deputy Prime Minister seriously saying that he will appoint 24 new UKIP Members of the House of Lords and 16 new peers to represent the British National party, or is it more about stuffing the other place full of Tory and Lib Dem cronies?

[The Deputy Prime Minister]

With respect, I think the hon. Gentleman has grasped the wrong end of the stick. The coalition agreement says that the appointments we make to an unreformed House of Lords—pending the long-awaited, and now even more long-awaited reform of the other place—will be made according to the proportion of votes won by parties at the last general election. That is precisely what we intend to do.

[Mr Peter Bone (Wellingborough) (Con)]

I wish the Deputy Prime Minister a happy new year. Was one of his new year resolutions to decide that, if he thinks a policy is right, it should be rushed through in a day? Will he answer properly a question he has been asked before? Why will the succession Bill be rushed through in a day under emergency legislation procedures? Those procedures should be used only for emergency legislation, which the succession Bill is not.

[The Deputy Prime Minister]

I wish the hon. Gentleman a happy new year too—and Mrs Bone. It is important to stress that the Bill is not a capricious legislative initiative on behalf of the Government. It was solemnly agreed at the Commonwealth summit in Perth by all the Commonwealth realms. It has also been subject to extensive discussion between officials in the Cabinet Office and the royal household, and between Governments and officials of this country and of the Commonwealth realms. We have said that we will take the lead in setting out the legislative provisions for the other Commonwealth realms. The legislative change is very precise, which is why we are keen to proceed as quickly as possible.

[Sheila Gilmore (Edinburgh East) (Lab)]

Perhaps the Deputy Prime Minister would like to take this opportunity to enhance his concern for people in difficulties. More than 60,000 people have signed a petition asking that the Government carry out a proper cumulative impact assessment of the changes to disability benefits. Will he ensure that that happens?

[The Deputy Prime Minister]

I am curious to know whether the hon. Lady believes that those impact assessments were delivered in full under the Labour Government—I do not recall them. She will know that we are on the verge of introducing a very significant change in the way in which disability benefits are administered in the years ahead, from the disability living allowance system to the personal independence payment system. That change will mean that many who have received disability benefits for years when there has been no check on whether they need it will finally, for the first time, be asked to be subject to certain objective tests. The change will also mean that people who do not currently receive benefits or support for their disabilities will receive it for the first time. We have been transparent in setting out our proposals.

The Attorney-General was asked—

[Mr John Spellar (Warley) (Lab)]

1. What steps he is taking to recover payments made to former senior staff at the Serious Fraud Office that were not properly authorised.

[Grahame M. Morris (Easington) (Lab)]

3. What steps he is taking to recover payments made to former senior staff at the Serious Fraud Office which were not authorised by the Cabinet Office or Her Majesty’s Treasury.

[The Attorney-General (Mr Dominic Grieve)]

As set out in my statement to the House on 4 December 2012, on learning of these agreements and payments, the new director of the Serious Fraud Office sought legal advice on whether the arrangements might be reopened and on whether money might be recovered. The advice he received is that the agreements, although entered into without the necessary approvals, are binding on the Serious Fraud Office.

[Mr Spellar]

If one of our constituents is overpaid on tax credits, or on their housing or council tax benefits, which often occurs through no fault of their own, the state claws the overpayment back, yet the Serious Fraud Office has made unauthorised redundancy payments to bureaucrat fat cats—some of nearly £500,000—but seems to be doing nothing to recover them. What, therefore, will the Attorney-General do to get the money back? Perhaps he could get a new lawyer, but he could also take action against those responsible for irresponsibly giving away public money.

[The Attorney-General]

I share the right hon. Gentleman’s disquiet about what has happened. Nevertheless, it is the duty of the director of the Serious Fraud Office, who is the accounting officer in this context, to take legal advice and to observe it when he receives it, and the legal advice he has received is quite clear. It is perhaps worth making one further point. The vast majority of the sums paid out would have been in line with the civil service compensation scheme. In my judgment, some payments may well not have been in line with the scheme, but the majority were—I would stress the totality of the sums involved. Should there be any further developments, I will inform the House of them. Like the right hon. Gentleman, I do not consider the matter to be satisfactory—it causes me disquiet, and the Public Accounts Committee may well wish to look into it.

[Grahame M. Morris]

I thank the Attorney-General for his reply to my right hon. Friend the Member for Warley (Mr Spellar). In that spirit of openness, will he publish the findings of the independent investigation into the payouts commissioned by the current director of the Serious Fraud Office? Will he also indicate whether any legal or disciplinary action will be taken against the individuals responsible?

[The Attorney-General]

On the first point, my office and the Serious Fraud Office have received requests for this information, and we are currently considering whether any further information can be released. I would like to see as much of the information released as possible.

On the second point, it is right to make it clear that the person responsible for making these payments is no longer working in the civil service.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does the Attorney-General realise that this is merely a symptom of something seriously wrong with the Serious Fraud Office in terms of its leadership, culture and record over recent years?

[The Attorney-General]

May I recommend that the hon. Gentleman look at the report by Her Majesty’s Crown Prosecution Service Inspectorate on the Serious Fraud Office, as he will see that it has many laudatory things to say about the way in which the SFO has operated and sees it as capable of achieving significant outcomes in challenging cases? That is not to say that I do not think that there is room for improvement—I certainly do. A new director, David Green, has been appointed, and I have every confidence that he will be able to make the necessary changes. For example, he will be implementing the changes that the inspectorate recommended, and it will of course make a follow-up report to track that progress.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

While we are on the subject of the efficiency of the Serious Fraud Office, may I ask the Attorney-General how it is that, despite the appalling behaviour of some bank staff in some British banks and the enormous fines that have been imposed on those banks by the regulatory authorities in both New York and London, no senior banker in this country has yet been prosecuted for complicity in serious criminal banking offences?

[Mr Speaker]

I know that in respect of this question the right hon. Gentleman will have in mind fraud in particular, which properly concerns the Serious Fraud Office. He did not say it, but I know that is what he meant.

[Sir Peter Tapsell]

I withdraw the word “criminal” and insert the word “fraudulent” instead.

[The Attorney-General]

I thank my right hon. Friend for his question, in whichever context. The Serious Fraud Office is carrying out a major inquiry and investigation into the LIBOR scandal. The conduct of the investigation is obviously a matter for the SFO, but the matter has not been ignored.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

The Attorney-General has referred to the report by Her Majesty’s Crown Prosecution Service inspectorate. I have read it, and it says that the Serious Fraud Office needs to improve its performance and appears to be suffering considerable resourcing problems. Will he consider the suggestion by the director of the SFO that the agency be allowed to retain more of the proceeds of crime that it confiscates? Might that be a way in which it could increase its funding?

[The Attorney-General]

The hon. Lady raises an interesting question which may turn out to be a good subject for debate in this House at some point. There is clearly potential for changing the rules on the retention of the proceeds of crime by prosecuting agencies, but it is equally right to point out that it is not an uncontroversial subject. Disquiet is expressed about prosecutors being dependent on asset seizure for the way in which they operate, and that also raises some profoundly difficult ethical issues. For those reasons, I would counsel caution about whether that is necessarily the right way forward, although I am open-minded about any improvements that can be made on funding.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

2. How many successful prosecutions for tax evasion the Serious Fraud Office has completed in each of the last five years.

[The Solicitor-General (Oliver Heald)]

It is the Crown Prosecution Service rather than the Serious Fraud Office that prosecutes tax evasion cases. The records of the Crown Prosecution Service show that in 2008-09 there were 226 convictions, and the latest figures, up to November 2012, show 349.

[Simon Hughes]

We had a major debate on tax avoidance yesterday, and I think the country and Parliament want us to be very tough on tax evasion. Can the Solicitor-General assure us that the Government and the Crown Prosecution Service will concentrate on large national and international companies, and not on the small fish, so that ordinary people realise that they are not being singled out when much bigger prizes are available from much naughtier people?

[The Solicitor-General]

I can certainly give my right hon. Friend the assurance that from top to bottom the Chief Secretary to the Treasury, who has given us a target of increasing prosecutions fivefold, and all parts of Government will tackle this issue hard. From the point of view of the Attorney-General’s office, my right hon. Friend may be interested to know that we have been referring cases where sentences are unduly lenient to the Court of Appeal. It has recently been established that seven years’ imprisonment should be the starting point for significant tax fraud cases.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Tax fraud is estimated to cost the Government £3.3 billion. What steps are the Serious Fraud Office and the Department taking to address that?

[The Solicitor-General]

The Crown Prosecution Service, with the police, is working extremely hard on tax evasion cases to ensure that as many as possible are brought to court. As I mentioned, the Chief Secretary to the Treasury has set the target of a fivefold increase in cases. The figures I read out show that since 2008-09, there has been a major increase in the number of convictions.

[Anas Sarwar (Glasgow Central) (Lab)]

4. What steps he is taking to support victims of child abuse in the prosecution process.

[The Solicitor-General (Oliver Heald)]

The Crown Prosecution Service takes all allegations of child abuse very seriously. Supporting victims of child abuse is vital to successful prosecutions. The CPS works closely with the police and voluntary sector agencies to ensure that proper support is provided to victims at all stages.

[Anas Sarwar]

In the past two years, reports of child abuse have shocked the entire country. Currently, at least 13 inquiries are taking place, including three BBC inquiries into Jimmy Savile, a Department of Health investigation into Broadmoor, a CPS inquiry, and inquiries into child protection in Rotherham and Rochdale. What discussions has the Minister had with other ministerial colleagues to ensure all that work is pulled together, and to ensure that all victims of child abuse receive the support and protection they deserve?

[The Solicitor-General]

The Director of Public Prosecutions is working closely with all other authorities and took a personal lead in September by holding a round-table to consider how child sexual exploitation offences can be tackled. Witness care units are important and new Crown Prosecution Service guidance on child sexual exploitation is due in the new year. A great deal is being done, and special measures are being put in place to help witnesses give evidence.

[Sir Paul Beresford (Mole Valley) (Con)]

My hon. Friend is probably aware that a small team is looking into the history of cases of child abuse complaints in Northern Ireland. One member of the team is an ex-senior inspector in the Metropolitan police who explained to me that, looking back at cases from 1920, believe it or not, one stark fact is the astonishing lack of support for victims, including from the Crown Prosecution Service. Would my hon. Friend be interested in meeting him at the right time to consider whether there is anything from his expertise and research that would be of help?

[The Solicitor-General]

I am grateful to my hon. Friend for that offer, which I will certainly take up. He is right to say that support for witnesses is crucial to enable them to give their evidence in a confident and effective way. That is why the witness care units, the use of the voluntary sector supporters and the other work going into special measures at court to make it easier for witnesses to give evidence are all important. I look forward to the meeting.

[Keith Vaz (Leicester East) (Lab)]

I welcome the steps taken by Keir Starmer and Nazir Afzal to try to reorganise how the Crown Prosecution Service deals with these matters. However, the fact remains that in relation to Rotherham there have been no prosecutions this year in the whole of south Yorkshire, despite 600 victims having been identified in the past few years. Does the Solicitor-General share my concern? Can we please see more prosecutions of the perpetrators?

[The Solicitor-General]

As the right hon. Gentleman will be aware, it depends on the police investigating cases thoroughly and then on the Crown Prosecution Service reviewing them to see what evidence is needed. A full review was carried out after the Rochdale case, which was particularly concerning. That was last autumn, since when the CPS has been working on the new guidance, which I hope will lead to more prosecutions. I accept the need for more prosecutions in this area, but we want to establish best practice, and that guidance will be out soon.

[Jane Ellison (Battersea) (Con)]

On another form of child abuse—female genital mutilation—there have been no prosecutions whatsoever in this country since it became illegal. Does the Solicitor-General share my hope that the Director of Public Prosecutions’ robust new action plan will lead to more progress in this area?

[The Solicitor-General]

Yes, I certainly do. I have personally raised and discussed this subject with the DPP and was delighted that he held the round-table last September, which led to the robust action plan that my hon. Friend mentions. That is about improving the evidence available, identifying what is hindering investigations and prosecutions, exploring how other jurisdictions deal with these cases and ensuring that the police and prosecution work together closely on what are very difficult cases.

[Fiona Mactaggart (Slough) (Lab)]

5. How many prosecutions for human trafficking there have been in the most recent period for which figures are available; and if he will make a statement.

[Andrew Selous (South West Bedfordshire) (Con)]

7. What steps he is taking to increase prosecutions for human trafficking.

[The Solicitor-General (Oliver Heald)]

The Crown Prosecution Service charged and prosecuted 64 cases where human trafficking was the main offence between 1 April 2012 and 2 January this year, and has prosecuted other human trafficking cases using other legislation. The CPS is working with law enforcement and other agencies to improve investigation and prosecution and to encourage victims.

[Fiona Mactaggart]

Those figures sound a little better than the ones previously published that suggested to me that out of 25 European countries Britain had fewer prosecutions for human trafficking specifically than all bar Malta, Slovakia, Estonia and Finland. What effect does the Solicitor-General believe the relatively low level of prosecution for specific human trafficking offences has on the potential for future human traffickers?

[The Solicitor-General]

Of course, it is very important that we prosecute cases of this kind, but I make the point to the hon. Lady that the figures I read out and which are often quoted relate to cases where human trafficking was the main offence, but quite often with human trafficking, as she will know, the main offence is a violent assault or a rape, and it is the more serious offences that are flagged. In another 111 cases, in addition to the 64 I mentioned, human trafficking was one of the offences, but the main offence was a rape or major conspiracy.

[Andrew Selous]

There have been relatively few prosecutions for human trafficking involving forced labour, compared with, say, sexual exploitation, although there have been major successes in my own county of Bedfordshire and, just before Christmas, in Gloucestershire. These forced labour exploiters often earn enormous sums of money. What can we do to take some of that money to help the police fund these complex and difficult investigations?

[The Solicitor-General]

My hon. Friend will know of the Connors case, which was finally concluded yesterday —an appalling case involving vulnerable people being forced to work by the criminals concerned. It is important that we tackle these cases, but the main offence was introduced only in 2010 and related to events that occurred after that date, so we are very much at the early stage of bringing these cases to court. The Connors case is one of the first. An agreement has been reached with the Gangmasters Licensing Authority, however, to refer cases to the police, and other steps are being taken to toughen up on internal trafficking.

[Mark Durkan (Foyle) (SDLP)]

Has the Solicitor-General had any indication of the number of cases where files were submitted and the decision was taken not to prosecute, or of the number of decisions that were based on concerns about the witness capacity of the victims?

[The Solicitor-General]

I will look into that and am happy to write to the hon. Gentleman, because I do not have the information here. The Crown Prosecution Service is anxious to prosecute in this area if the evidence is available. All too often it is difficult to obtain the quality of evidence from overseas that one would want in order to prosecute effectively. There is also the problem that victims need a great deal of support and encouragement. All these matters are being addressed, and I will write to the hon. Gentleman on his point.

[Mr Peter Bone (Wellingborough) (Con)]

I welcome what the Government are doing in this field—they are being very proactive—but does the Solicitor-General share my concern that there is a temptation for the Crown Prosecution Service to choose lesser charges for which it is easier to secure a conviction, such as immigration offences, which results in traffickers getting a lower sentence than if they had been prosecuted for human trafficking?

[The Solicitor-General]

I would dispute that. As I mentioned to the hon. Member for Slough (Fiona Mactaggart), many human trafficking cases involve other offences, which are often more serious. With sexual exploitation cases, where there are continual rapes and serious offences of that sort, it is right to charge for rape as the principal offence because it is more serious in some ways. I therefore do not accept that the Crown Prosecution Service is going for lower charges. This is a matter that we in the Attorney-General’s office keep under review.

[Graeme Morrice (Livingston) (Lab)]

6. Whether implementation of the recommendations of the Leveson report will affect the enforcement of laws of contempt.

[The Attorney-General (Mr Dominic Grieve)]

Lord Justice Leveson has provided detailed recommendations on how best the press might be regulated in future. Those recommendations and their implementation will be considered by the Government and Parliament. Whichever regulatory model is finally chosen, the law of contempt remains applicable. When appropriate, I will continue to bring proceedings against publications that create a substantial risk that the course of justice in proceedings will be seriously impeded or prejudiced.

[Graeme Morrice]

What consideration has the Attorney-General given to Lord Leveson’s view that further guidance is needed on press coverage of police investigations and that

“save in exceptional and clearly identified circumstances…the names…of those…arrested or suspected of a crime should not be released to the press or the public”?

[The Attorney-General]

I have noted what Lord Justice Leveson has said and it may be something to be incorporated in press regulation. The current position on the law of contempt is that proceedings are active from the time of arrest. Those considerations are not identical to those that Lord Justice Leveson was considering, but they raise the issue that after arrest the press has to have in mind the possible impact on the fairness of the trial process thereafter. That could include naming a suspect; equally, it might be perfectly acceptable to do that.

[Mr Robert Buckland (South Swindon) (Con)]

There is continuing concern, nevertheless, about the almost habitual naming of suspects after arrest, which in the minds of many of us has the potential to cause real prejudice. Will my right hon. and learned Friend do all he can to monitor the current situation and ensure that the law is prosecuted to its full effect?

[The Attorney-General]

My hon. Friend raises an important point. I am certainly mindful that in many of the contempt matters brought to my attention the problem has arisen in the period between arrest and charge. Of course, if the House were minded to change the law on anonymity, which has been floated previously in private Members’ business, that could be done by enacting legislation. However, let me make it quite clear that this would need a legislative solution, not one that I can in some way “magic up”. The law of contempt has to be applied free of all political considerations, and that is what I try to do as best I can.

[Mr Speaker]

I would not want the hon. Member for Glasgow North West (John Robertson) to feel socially excluded, so we will accommodate him, but he needs to be very brief.

[John Robertson (Glasgow North West) (Lab)]

8. What recent assessment he has made of the Serious Fraud Office’s ability to conduct a succession of large-scale inquiries.

[The Attorney-General (Mr Dominic Grieve)]

The recent report by Her Majesty’s Crown Prosecution Service Inspectorate demonstrates that the Serious Fraud Office has the ability to conduct large-scale inquiries, although there is scope for improvement. Funding for the Serious Fraud Office is kept under constant review. There is a set budget for the SFO, but as the Prime Minister has previously made clear in relation to the LIBOR investigation, if the SFO needs more resources, they will be provided.

[John Robertson]

Can the right hon. and learned Gentleman confirm that none of the additional funding promised for the LIBOR investigation has been received by the Serious Fraud Office, and will he explain why? It is envisaged that the investigation will take three years. Why so long?

[The Attorney-General]

The undertaking is for up to £3.5 million for each of the next three years to be made available as and when required. When the SFO requires it, it will be made available.

[Mr Speaker]

I am grateful to the Attorney-General. I remind the House that, in addition to the two urgent questions granted today, there is a statement followed by a very heavily subscribed Second Reading debate on the Welfare Benefits Up-rating Bill. The UQs will therefore be run strictly to time, but depending on the level of interest, it might not be possible to accommodate all colleagues who are interested. I shall do my best, and I invite the House to do the same.

Ibrahim Magag

Tuesday 8th January 2013 Commons Chamber

12:35

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

(Urgent Question): To ask the Home Secretary to make a statement on the disappearance of Ibrahim Magag.

[The Secretary of State for the Home Department (Mrs Theresa May)]

On 26 December 2012, Ibrahim Magag, a Somali-born British national who is subject to a terrorism prevention and investigation measure, failed to report for his overnight residence requirement. As I told the House yesterday, the police believe that he has absconded, and his whereabouts are currently unknown.

On 31 December, at the request of the police, I asked the High Court to revoke the anonymity order that was in force in relation to Magag. The police subsequently issued a public appeal for information that might lead to his location and apprehension. The Government took steps to inform Parliament of this incident as soon as it was lawful and operationally possible to do so. The Under-Secretary of State for the Home Department, my hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire), spoke to the Chairmen of the Home Affairs Select Committee and the Intelligence and Security Committee on 31 December. This was followed by letters to both Committee Chairmen, to the shadow Home Secretary and to you, Mr Speaker. Copies of the letters were placed in the Library of the House on the same day.

The statements that the police issued on 31 December and 2 January confirm that, at this time, Magag is not considered to represent a direct threat to the British public. The TPIM notice in this case was intended primarily to prevent fundraising and overseas travel. The Government do not believe that Magag’s disappearance is linked to any current terrorism planning in the UK. Nevertheless, we are of course taking this matter very seriously.

The police are doing everything in their power to apprehend Magag as quickly as possible. Although I cannot give operational details, I can confirm that the police, the Security Service and other agencies are devoting significant resources to the search for Magag. Members of the public with any information relating to the search should contact the confidential police anti-terrorist hotline.

Before the shadow Home Secretary stands up again, I would like to remind the House that this is not the first abscond of a terror suspect. In six years of control orders, there were seven absconds, of which six were never apprehended. Magag’s abscond is serious, and the authorities are doing everything they can to locate him. I will update the House when there are further developments as soon as it is possible to do so.

[Yvette Cooper]

Ibrahim Magag is still missing after 13 days, and the Home Secretary clearly has no idea where he is. The first priority must be to find him, and she should tell us more about the additional resources being put into the search. Will she also tell us what the threat assessment really is? She said that the risk simply related to “fundraising and overseas travel”, yet the courts have said that Magag has attended terrorist training camps in Somalia, that he was fundraising for known terrorists and that

“the operational tempo and capability of the group of extremists based in London will be degraded by removing his operational role from London”.

Does the Home Secretary think that that threat assessment still holds?

How was Magag able to abscond in the first place? Was he even under surveillance at the time? Cabwise, a trade news service for London cabbies, reported yesterday that Magag

“used a London taxi in the vicinity of Triton Street at around 17:20 on 26 December.”

Is that true? Is the Home Secretary worried that surveillance can be shaken off simply by jumping into a black cab?

The Home Secretary allowed Ibrahim Magag to return to London. She has not answered the question from the independent reviewer, David Anderson, about whether it would have been harder to abscond in the west country, where Magag was made to live under a control order and where it would have been harder for him to get help from his associates, harder to hide and harder to get forged papers. She knows that relocation makes it harder to abscond, because she has included it in her draft emergency terror legislation.

The Home Secretary referred to the early years of control orders, but David Anderson, the independent reviewer has said:

“The absence of absconds since mid-2007 has coincided with the trend away from light touch control orders, and/or the more extensive use of relocation.”

The right hon. Lady chose to ditch relocations, and she has personally made it easier for people to abscond. Other people previously relocated under control orders are also now back in London on terrorism prevention and investigation measures. Could any one of them simply jump into a black cab tomorrow and be off?

Will the Home Secretary ask the independent reviewer urgently to investigate the failures of this case and to review the issue of relocation? She has ignored security advice before and someone involved in terrorism is now out on our streets. She must not ignore the evidence on relocations. She should put the national interest ahead of her political interests and stop ducking the issue. Is it not time that she took some responsibility and sorted this mess out?

[Mrs May]

I am very sorry that the shadow Home Secretary chose to pursue that line in relation to this case. Let me repeat the key fact that she does not seem to want to accept—that this is not the first time that somebody has absconded. She seems to think that it is all down to the difference between control orders and TPIMs, but in six years of control orders there were seven absconds and six of the individuals involved were never apprehended.

The right hon. Lady keeps saying that it is all down to whether we have the power to relocate, but relocation powers were available throughout the history of control orders and they did not prevent seven absconds by control order subjects. If she will not listen to me, perhaps she will listen to the police and the Security Service, which made it absolutely clear at the time TPIMs were introduced that there should be no substantial increase in overall risk and that appropriate arrangements were in place for the transition from control orders to TPIMs—and that remains their position.

The right hon. Lady asked about the current level of risk. I repeat what I said in response to her question—that the statements the police issued on 31 December and on 2 January confirm that at this time Magag is not considered to represent a direct threat to the British public, and that the Government do not believe that his disappearance is linked to any current terrorism planning in the UK.

The right hon. Lady made a number of references to David Anderson, the independent reviewer. He has said:

“The only sure way to prevent absconding is to lock people in a high security prison.”

I agree, which is why we provided extra funding to the Security Service and the police when we introduced TPIMs to maximise the opportunities to prosecute terrorists in open court and to minimise the risk they pose to national security. The alternatives—whether we are talking about TPIMs or control orders—are highly useful disruptive tools, but because they do not involve locking people up, as the history of control orders shows, there will always be a risk of abscond.

Currently, the police and other agencies are, as I have said, working very hard to apprehend Ibrahim Magag. They have taken the operational decisions that needed to be taken and the way in which they pursue their inquiries is an operational matter for them. When the dust has settled, we will look again to see whether any lessons need to be learned. The independent reviewer produces an annual report that covers TPIMs, and I fully expect him to cover them in his review. I say to the shadow Home Secretary, however, that all she has done in highlighting this matter is to demonstrate the weakness of her argument, as what she says about TPIMs was also true of control orders. I hope that the whole House will join me in supporting the police, the Security Service and other agencies in continuing their work and in keeping our country safe.

[Several hon. Members]

rose—

[Mr Speaker]

Order. To maximise the number of participants in these exchanges, I appeal to right hon. and hon. Members to ask single short supplementary questions and, of course, to the Home Secretary to provide us with her characteristically pithy replies.

[Mr James Clappison (Hertsmere) (Con)]

Since the previous Government introduced the Human Rights Act 1998, it has been more difficult, has it not, to strike the right balance between the rights of terrorists and the proportionate protection of society from the threat they present? Should we not be thinking about the long- term future of the Human Rights Act, notwithstanding the support it has from Opposition Members?

[Mrs May]

My hon. Friend tempts me down a road that, if I were to travel down it, would probably necessitate a rather longer response than the pithy answer you have requested of me, Mr. Speaker. I can tell him, however, that the Government are looking at the Human Rights Act, and that the Commission on a Bill of Rights is considering what legislative support we should have in relation to human rights.

[Keith Vaz (Leicester East) (Lab)]

I thank the security Minister—the Under-Secretary of State for the Home Department, the hon. Member for Old Bexley and Sidcup (James Brokenshire)—for contacting me about this matter on new year’s eve. May I briefly express two concerns? First, it has been alleged that Magag was forging passports while he was in the camp in Somalia. Can the Home Secretary confirm that the police have his passport so that he is not able to travel abroad? Secondly, will she personally review the arrangements for the other nine people who are subject to TPIMs, in order to be satisfied that they are all in place and are secure?

[Mrs May]

The issue of the passport has not been discussed openly in public, but given the right hon. Gentleman’s position I shall be happy to talk to him about it on Privy Council terms. As for his second question, when one TPIM subject absconds, the agencies take appropriate steps to look at other TPIM subjects.

[Dr Julian Huppert (Cambridge) (LD)]

Does the Home Secretary agree that the whole concept of internal exile without trial is abhorrent? Labour should never have introduced such a Stalinist, authoritarian approach, and she was right to get rid of it. Someone who has committed a terrorist offence should be tried, convicted and jailed, not exiled indefinitely without trial.

[Mrs May]

As I explained in my response to the shadow Home Secretary, one of the purposes of the extra resources that we provided for the Security Service and the police following the introduction of TPIMs was to improve their ability to identify opportunities for prosecution. As was pointed out by the independent reviewer, the best place for a terrorist suspect is behind bars.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

The Home Secretary decided to rebalance in favour of civil liberties rather than security, and that cost £50 million. Will she answer this question? Did the absence of relocation affect the ability of this individual to abscond?

[Mrs May]

When the Government took office they decided to review counter-terrorism legislation. There was a public consultation, and a number of changes were made as a result. It is possible for people to abscond from wherever they are; indeed, three of the control order subjects who absconded did so from outside London.

[David T. C. Davies (Monmouth) (Con)]

Is not one of the root causes of the current problem the fact that members of the Labour Government allowed so many of these people to have visas and passports, letting them stay in the United Kingdom? Is it not time that we rounded up as many of them as possible, and established grounds on which to strip them of their visas and passports and deport them to whichever hellhole they came from and wish to emulate?

[Mrs May]

My hon. Friend makes his point in his normal forthright manner. I can tell him that the Government view national security as an absolute priority and take every possible step to keep the public safe, through deportations when they are possible, through the application of TPIMs, or through other measures.

[Hazel Blears (Salford and Eccles) (Lab)]

On many occasions the Home Secretary has been at pains to reassure the House that the extra measures are sufficient to mitigate any increased risk caused by the absence of a relocation power and the move from control orders to TPIMs. Why were those additional resources not effective in this case?

[Mrs May]

It is true that when we introduced TPIMs we made extra resources available to the Security Service and the police. However, as I said in my original response in relation to whatever powers actually exist, the best place for a terrorist or a terrorist suspect is behind bars, because without that there is a risk of absconding.

[Michael Ellis (Northampton North) (Con)]

Does my right hon. Friend agree that the crude political posturing of Labour Members is all the more ironic given that they did not even vote against TPIMs when the Government proposed their introduction, and given that they lost seven people under control orders, six of whom have never been seen again?

[Mrs May]

I absolutely agree with my hon. Friend. The point that the shadow Home Secretary seems incapable of accepting is that under control orders with relocation powers, seven people absconded.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

The Home Secretary is at pains to say that it is not all about relocation, and she reminds the House that she chose to legislate to give these suspects access to mobile phones and the internet, and for a sunset clause that would kill this regime off after two years even if the threat level from the individual had not changed. Given the disappearance of Mr Magag, does she not regret regarding increased risk to the public and unnecessary extra pressure on the police and the security services as an acceptable price to pay and as, in the end, a civil liberties pose rather than a move to increase national security?

[Mrs May]

I am confident in the TPIM package that was available—the TPIM measures plus the extra resources that were made available to the Security Service and the police. We of course consulted on them at the time this was done. As I said in response to the urgent question from the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), they were clear that there was no substantial increase in risk, and that remains their position.

[Mr Ben Wallace (Wyre and Preston North) (Con)]

Does my right hon. Friend agree that the best way to avoid such dangerous individuals being loose in our society is to improve our ability to intercept their communications? Will she therefore agree to carry on supporting the telecommunications Bill—which I hope will come before the House—so that our agencies can do the best job they can?

[Mrs May]

I certainly agree with my hon. Friend that it is important to improve and develop the ability of the agencies to have access to communications data. That, if I might gently remind my hon. Friend, is not about intercepting data. Intercept of data is a separate issue under the Regulation of Investigatory Powers Act 2000, but it is true that we need access to those communications data. As terrorists and others—organised criminals, paedophiles and others—use new means to communicate, it is important that the Government have access to the communications data from those new means of communications.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

The Home Secretary has repeated several times this afternoon that the Security Service and the police advised that there would be no substantial increase in risk as a result of the introduction of TPIMs, but the question that she is singularly failing to answer is how she can justify any increase in risk to the safety of this nation. Or is she saying that the absconding of Mr Magag and the more relaxed conditions that allowed it to happen are now part of an additional but acceptable risk that she is prepared to take?

[Mrs May]

I say to the right hon. Gentleman, as I have said to him on a number of occasions, because he has asked a number of questions in relation to TPIMs—[Interruption.] He says from a sedentary position that he will continue to do so, and I will continue to answer them in the same way. When we looked at the legislation, we did introduce the TPIMs. One of the purposes of the TPIMs was to ensure that people were better able to find evidence that would lead to prosecutions. Extra resources were given to the Security Service and the police at the time, and the Security Service and the police at the time and now are clear that there was no substantial increase in risk.

[Bob Stewart (Beckenham) (Con)]

In my experience, the very best way of stopping potential terrorists in action, in thought or in any deed is to relocate them. Will my right hon. Friend reconsider the measure? I was always uneasy about changing from control orders.

[Mrs May]

I have to say to my hon. Friend that my view, as I have stated this afternoon, is clearly that the best way to deal with terrorists and terrorist suspects is to be able to prosecute them and put them behind bars.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Apparently, during the period that he was supposedly subject to a TPIM, this man was allowed to meet regularly with other known extremists. Why did the Home Secretary think that was a good idea?

[Mrs May]

For every individual who is placed on a TPIM, there is a particular package of measures that is part of that. The details of that are operational matters. What I can say to the hon. Gentleman is that the package of measures is carefully considered for each individual and is reviewed regularly.

[Graham Evans (Weaver Vale) (Con)]

Will my right hon. Friend remind the House that more people absconded under the previous Government than under this Government? While she is at it, will she remind the House that under the previous Government and under the control order regime there were more absconds that were not based in London?

[Mrs May]

My hon. Friend has put it well and put it on the record. It is the singular fact that the shadow Home Secretary is reluctant to accept—indeed, will not accept—that there were seven absconds under control orders, and six of those individuals were never apprehended.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Even if Magag does not pose a direct, imminent terror threat, as the Home Secretary claims, does she not accept that his presence in a city such as London is of great concern and risks radicalising young vulnerable people such as some in my constituency? What assurances can she give that that will not happen?

[Mrs May]

We take that individual’s abscond extremely seriously, as I have said. The police, the Security Service and other agencies are working and putting resources into trying to apprehend him. That is entirely right and, as I said earlier, I hope the whole House will support the police and the other agencies in doing that.

[Robert Halfon (Harlow) (Con)]

Does not the fact that six people absconded under the control orders and were never found show the major flaws in the control order system? Can my right hon. Friend set out how the TPIM system, with the extra resources thrown at it, is much more advantageous?

[Mrs May]

My hon. Friend has hit the nail on the head: the Opposition fail to accept that under the control order regime there were seven absconds, six of whom were not apprehended. That was under a regime that had the relocation power. What we did with TPIMs and in giving extra resources to the police and the Security Service was to put in place the regime that was appropriate for national security, but which also should allow greater opportunities for prosecution.

[Ian Austin (Dudley North) (Lab)]

The background to this is clear. Under control orders, people absconded, so the extra power to enforce their relocation was used and as a result, during the next four years, no one absconded. The Home Secretary made a political decision to get rid of that power and allowed this man to come back, live where he wants, mix with whoever he likes and as a result, within 12 months he has absconded. That is what happened. It is clear. Is it true—yes or no—did he just ring a cab?

[Mrs May]

The situation that the hon. Gentleman portrays in the whole of his question is not the situation that pertains. I made it clear in answer to his hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) that for any individual on TPIMs a range of measures can be applied, including, for example, listing those with whom they may not associate. Those measures are put in place for each individual. They are carefully considered and regularly reassessed.

[Mr Robert Buckland (South Swindon) (Con)]

Does my right hon. Friend agree that the real issue is not about relocation orders but about the extra resources that were given to the police and security services when TPIMs were introduced? Can she reassure me that those extra resources are being used with specific reference to this person so that he can be apprehended as soon as possible?

[Mrs May]

The extra resources that were available were to be used on the introduction of the TPIMs and for a period of time in terms of the individuals who were on TPIMs and the TPIM regime that had been introduced. In relation to resources for the potential apprehension of Ibrahim Magag, I am assured by the police and others that they have the resources that they consider necessary to be able to conduct the inquiries and the search they are conducting.

[Kevin Brennan (Cardiff West) (Lab)]

Further to the question from my right hon. Friend the Member for Leicester East (Keith Vaz), the Chair of the Select Committee, why cannot we all be told whether the authorities have Magag’s passport? Do not the public have a right to know?

[Mrs May]

Perhaps I can answer the question in this way. There are certain facts in relation to an individual that are not publicly known because they are subject to an anonymity order, and there are various legal issues relating to that. If I may go away and check those issues, and if it is possible to make a public reference in the House in relation to the passport issue, I will place a letter in the Library of the House.

[Mr Speaker]

I thank the Home Secretary and colleagues for their co-operation.

South London Healthcare NHS Trust

Tuesday 8th January 2013 Commons Chamber

12:59

[Dame Joan Ruddock (Lewisham, Deptford) (Lab)]

(Urgent Question): To ask the Secretary of State for Health if he will make a statement on the trust special administrator’s report on South London Healthcare NHS Trust and the NHS in south-east London.

[The Secretary of State for Health (Mr Jeremy Hunt)]

I have today published the final report of the trust special administrator to South London Healthcare NHS Trust and laid it before Parliament. I received the report yesterday and must now consider it carefully. I am under a statutory duty to make a decision by 1 February on how best to secure a sustainable future for services provided by the trust.

The trust special administrator began his appointment on 16 July. He published his draft report on 29 October and undertook a consultation on his draft recommendations between 2 November and 13 December. More than 27,000 full consultation documents and 104,000 summary documents were distributed during the consultation and sent to 2,000 locations across south-east London, including hospital sites, GP surgeries, libraries and town halls. A dedicated website was established to support the consultation, the TSA team arranged or attended more than 100 events or meetings and the consultation generated more than 8,200 responses.

I understand the concerns of hon. Members and, indeed, the people living in areas affected by the proposals, especially in Lewisham. They have a right to expect the highest quality NHS care, and I have a duty to ensure that they receive it. However, they will understand that it would not be appropriate for me to give a view on the report’s recommendations only one day after receiving it.  To do so would be pre-emptive and would prejudice my duty to consider the recommendations with care and reach a decision that is in the best interests of the people of south-east London.

However, I have made it clear that any solution would need to satisfy the four tests outlined by the Prime Minister and my predecessor, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley), with respect to any major reconfigurations: the changes must have support from GP commissioners; the public, patients and local authorities must have been genuinely engaged in the process; the recommendations must be underpinned by a clear clinical evidence base; and the changes must give patients a choice of good-quality providers.

The challenges facing South London Healthcare NHS Trust are complex and long standing, but to fail to address them is to penalise other parts of the NHS from which resources must be taken to finance the biggest deficit anywhere in the NHS. To date, it has not proved possible to ensure that South London Healthcare NHS Trust can secure a sustainable future for its services within its existing configuration and organisational form. In appointing a special administrator to the trust, the Government’s priority was to ensure that patients continue to receive high-quality, sustainable NHS services, and I will consider the special administrator’s report with that objective in mind.

[Dame Joan Ruddock]

I thank the Secretary of State for his reply. Neither I nor my hon. Friends the Members for Lewisham East (Heidi Alexander) and for Lewisham West and Penge (Jim Dowd) are opposed to change or to greater efficiencies, but we are opposed to the destruction of Lewisham hospital, which is a solvent, well-regarded trust that meets all its performance and financial standards.

There is a fundamental question at stake. My right hon. Friend the Member for Leigh (Andy Burnham) has made it clear that the powers associated with the failure regime under which the TSA acts were not intended to be used to encompass the services of other hospitals. Yet in order to tackle the huge financial deficit sustained by South London Healthcare Trust, the TSA proposes to close Lewisham hospital’s accident and emergency services, including the acclaimed children’s A and E, to end all medical and surgical emergency care and to demolish maternity services. He then proposes to sell off half the hospital’s land. That cannot be justified. Each year around 120,000 people use Lewisham A and E, more than 30,000 children use the children’s A and E and more than 4,000 babies are born in the hospital. There is no current capacity at any of the other hospitals in the area to provide for those patients.

These proposals amount to a major reconfiguration by the back door, and they are opposed by virtually all the health professionals in the area and by the people of Lewisham. Does the Secretary of State believe that a reconfiguration of services in south-east London is necessary? If he does, he needs to propose one with the relevant consideration for patient safety and health care standards and that meets his four tests. These proposals do none of that and must be rejected.

[Mr Hunt]

First, I want to recognise the right hon. Lady’s real concerns about the proposals that have been made. I also recognise that they reflect the concerns of many of her constituents and, indeed, many people in Lewisham. Her point about scope is one I replied to in my letter to the right hon. Member for Leigh (Andy Burnham) before Christmas. I have taken legal advice on that and been told that under the unsustainable provider regime, which the previous Government put into law, an administrator must initially look at a trust’s defined area, but if they conclude that the defined area is not in itself financially sustainable—they have a duty to come back with a financially sustainable solution—and if it is necessary and consequential, they need to look at a broader area. Of course there is interrelation between different parts of the south-east London health care economy. However, I will be getting fresh legal advice on that point, because I recognise that it is extremely important.

I welcome the fact that the right hon. Lady recognises that changes need to be made. I also hope that she understands that I have a duty to address this issue, which has affected hospitals in the South London Healthcare Trust area for many years. The deficit of the trust amounts to £207 million in the period since it was set up, and that is money that must be taken away from other parts of the NHS. I have a clear duty to address that issue. I will not comment on specific proposals today, but I will be very happy to meet her and her colleagues from Lewisham in order to hear from them directly about their concerns. Indeed, I will be meeting the trust special administrator on 10 January so that I can ask him any questions about his proposals before I make my decision, which must be within 20 working days.

[Bob Stewart (Beckenham) (Con)]

I remind my right hon. Friend that the Beckenham Beacon is not only modern, but extremely central. I stress the incredible value it could have in south London. I very much hope that the services currently provided there will increase, rather than decrease, at the end of this consultation.

[Mr Hunt]

I thank my hon. Friend for again speaking up for his constituents, as indeed I have done as a constituency MP on many occasions. I want to reassure him that the four tests we have outlined for any major changes to health care services would indeed apply to the Beckenham Beacon and that, were there to be any changes, we would need to be satisfied that they would have strong, local, clinical support, that his constituents had been properly consulted and that there was clear evidence that change would be beneficial.

[Andy Burnham (Leigh) (Lab)]

I apologise for missing the start of proceedings on this urgent question.

It has long been accepted that difficult decisions are needed to secure the sustainability of health services in south-east London. That is why recommendations from the review, “A Picture of Health”, were agreed under the previous Government. The trust special administrator has adopted many of those proposals, which we welcome.

However, the review presented today goes way beyond that and takes the NHS into new territory. It uses powers passed by the previous Government in a way that was never intended and, in so doing, sets a worrying precedent whereby normal processes of public consultation are short-circuited and back-door reconfigurations of hospital services are pushed through. The Health Act 2009, which I took through this House, states that

“the administrator must provide to the Secretary of State and publish a draft report stating the action which the administrator recommends the Secretary of State should take in relation to the trust.”

In making recommendations that have a major impact on another trust, is the Secretary of State not going beyond the powers this House has given to him? He has acknowledged that he needs to commission fresh legal advice, which suggests to me that the legality of the process is in doubt. Will he publish all the legal advice he has been given so far and give a commitment that any new legal advice he commissions will be made available?

As this is a financially driven process, the people of Lewisham have justifiable concerns about whether it is safe to close their A and E and downgrade the maternity services. Is the Secretary of State satisfied that a clinical case has been established behind these major changes? Given that all A and E departments in south London are currently overstretched and operating at full capacity, people will need to be convinced that these changes will not put lives at risk.

Finally, will the Secretary of State give a guarantee today to the people of Lewisham that, if he accepts the TSA’s recommendations, they will have the full consultation rights that come with any hospital reconfiguration, including the ability to challenge the clinical case and, if necessary, to refer it to the Independent Reconfiguration Panel? This process is attempting to rewrite the rules on making changes to hospital services, bypassing the intention of the House. It will send a shiver through any communities without a foundation trust, as it raises the prospect that their hospital will be able to be used as a pawn to solve problems in another.

People in Lewisham feel a huge sense of unfairness and I am sure that that will be shared by people across the House. The onus is on the Secretary of State to justify the changes and ensure that rules governing hospital changes are fair and respect the essential rights of all communities to be fully consulted and involved in any decision affecting their services.

[Mr Hunt]

We have followed to the letter the processes laid down in the law that the right hon. Gentleman’s Government passed. We followed the procedure extremely carefully. This is the first time that the procedure has been invoked, so we have taken extra legal advice to make sure that the processes followed strictly adhere to the letter of the law. I will continue to take legal advice, because I want to make sure that we absolutely follow the wishes of the House in how we carry out the procedure.

Unlike the right hon. Gentleman’s Government, we have introduced new safeguards for any major changes made to NHS services. Those safeguards did not exist when the right hon. Gentleman was Health Secretary. We have said that we will not accept any changes unless there is proper consultation of the local population, clear evidence and clear local clinical support. We made that commitment in the four tests, which did not exist under his Government.

I will not accept any of the changes that the special administrator proposes unless I am satisfied that all four tests have been met. They include proper local consultation, because I consider that to be extremely important.

[Gareth Johnson (Dartford) (Con)]

The report mentions an increase in elective surgery in Darent Valley hospital—my local hospital, which is just over the Kent border with south London. Although the hospital has enjoyed extra funding from the Government, it still has capacity issues. Will the Secretary of State ensure that the knock-on issues are taken into account before he makes any decision?

[Mr Hunt]

My hon. Friend makes a very important point. One of the most important things that I have to consider in the next 20 days is what he describes as the knock-on impact of all the proposed changes. I have a duty to find a solution that is financially and clinically sustainable for the South London Healthcare NHS Trust area. However, I need to consider the knock-on effects everywhere else, including in Lewisham and my hon. Friend’s constituency.

As well as legal advice, I will be seeking clinical advice and want to make sure that my officials agree with the financial considerations made in the report. I will consider all that advice in enormous detail before I come to any decisions.

[Heidi Alexander (Lewisham East) (Lab)]

I am grateful to the Secretary of State for agreeing to meet Members with Lewisham constituencies about this matter. Representatives of the Save Lewisham Hospital campaign, which is made up of local GPs, local hospital doctors and the public, are also very keen to meet the Secretary of State to put our case directly to him about why it is important to retain a full, admitting A and E and full maternity service at Lewisham. Will he agree to meet them?

[Mr Hunt]

I want to meet colleagues from the House but, as I am sure the hon. Lady will understand, I want to be careful not to restart the whole consultation process that has been happening in what I believe is a very thorough way in the past few months. However, one of the things that I will be considering very carefully—and I will listen to any points that the hon. Lady makes when I meet her—is whether the consultation has been done properly, as it needs to be done and as was intended by the legislation. I will not accept any changes unless I am satisfied on that point.

[Dame Tessa Jowell (Dulwich and West Norwood) (Lab)]

I welcome the Secretary of State’s apparently open-minded approach to the proposals, which have caused enormous clinical alarm in our hospitals as well as local concern.

Two particular issues affect my constituents and those of my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) in relation to King’s College hospital. I ask the Secretary of State to take them seriously. First, should the proposed closures at Lewisham hospital go ahead, that will impact on the King’s College hospital paediatric A and E, which is already overstretched; the staff have enormous concern about their ability to meet any additional demand.

Secondly, will the Secretary of State agree that discussions currently under way to merge the managements of King’s College hospital with those of Guy’s and St Thomas’s should be suspended while the extensive reorganisation threatens the stability of a number of hospitals? If they were to go ahead in parallel, that would risk engulfing our hospitals with preoccupations about reorganisation rather than there being a focus from our world-class hospital staff in south London on treating the patients that we represent.

[Mr Hunt]

The right hon. Lady makes two important points. As she knows, I visited King’s College hospital just before Christmas and was incredibly impressed by what I saw. I visited the geriatric ward and was really impressed, and I am sure that the paediatric service is outstanding as well. It came across to me as an extremely well run hospital. I will, of course, make sure that I consider the impact of the changes proposed by the trust special administrator on King’s, just as I will consider the impact on all surrounding hospitals.

With respect to the merger proposals, because the legislation requires me to come to a decision within 20 working days, the right hon. Lady will find that I have to make and publish my decision quickly enough to ensure that any impact from the changes is properly considered by the people pursuing the possibility of a merger between King’s, Guy’s and Tommy’s.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

The Secretary of State will understand that I have not been able to read the entire trust special administrator’s report in the hour or so I have had access to it. However, while I was reading the report, it became clear that a great deal of concern was expressed during the consultation about the implementation of the proposals. Indeed, the report highlights the fact that following previous reorganisations, costs have increased rather than reduced as a result of the very process of reorganisation.

Given those worries, will the Secretary of State agree to meet representatives from other boroughs, who are equally concerned? I remind him that he declined my request for a meeting on the trust special administrator’s draft report; I hope he will not decline to meet now that we have the full report. In particular, will he consider the implications for patient care and services of a major reorganisation, which can be disruptive and fail to deliver the savings envisaged?

[Mr Hunt]

I heed absolutely the right hon. Gentleman’s warning that reorganisations are not always the panacea that they are made out to be. We need to be absolutely clear that, if we accept the proposals, they will deliver a sustainable, robust and clinically sound outcome for the right hon. Gentleman’s and neighbouring constituents, as the trust special administrator believes they will. I shall be delighted if the right hon. Gentleman attends the meeting with other MPs affected by the proposal. I shall hear what he has to say further at that meeting.

[Clive Efford (Eltham) (Lab)]

The Secretary of State has to recognise the serious contradictions between the proposals in the trust special administrator’s report and the Conservative manifesto before the last general election. If he were to accept the proposals, particularly in relation to A and E, that would be a serious betrayal of promises made to the electorate. There are also the changes expected from the “A Picture of Health” proposals for Queen Mary’s hospital in Sidcup in relation to overnight elective surgery. How much is the Secretary of State bound by the specific promises made in the Conservative manifesto before the election when it comes to making a decision on the report?

[Mr Hunt]

We were concerned in the run-up to the last election at the pace and scale of many of the reconfigurations pursued by the last Government. That is why when we came into office we paused the reconfigurations and introduced the four tests—an additional safeguard to make sure that reconfigurations were not done without local clinical support.

We wanted to avoid what had happened so often, including in my own constituency—an alliance of Health Ministers and NHS managers riding roughshod over what local people wanted. We wanted to stop that, so we put in place new systems. I hope that the hon. Gentleman will be comforted by the robustness and thoroughness of the processes that we are now going through.

EU Fisheries Negotiations

Tuesday 8th January 2013 Commons Chamber

13:19

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

I represented the UK at the fisheries part of the Agriculture and Fisheries Council in Brussels on 18 to 20 December. Richard Lochhead, Michelle O’Neill and Alun Davies attended for Scotland, Northern Ireland and Wales respectively.

The annual December round of negotiations for total allowable catches, or TACs, and quotas is a difficult process, and this year was particularly challenging. UK fishermen were facing automatic 25% reductions in the time they can spend at sea, as well as significant decreases in TACs and quotas. I entered this year’s negotiation clear in my mind that decisions on quotas or on days spent at sea need to be based on three clear principles: following scientific advice, sustainability, and the need for continued discard reduction. We adhered to these principles throughout, and I am pleased to report to the House that the UK Government secured a deal that was good for the health of our seas and for the UK fishing industry.

We secured agreement to end automatic reductions to the number of days fishermen can spend at sea, overcoming legal obstacles in the cod recovery plan. The number of available days in 2013 will be at the same level as 2012, giving fishermen the time to fish sustainably, avoiding discards and juvenile fish. The quota for North sea cod in 2013 will be decided during the EU-Norway negotiations next week. We removed the requirement for this to be based on an automatic 20% reduction, instead enabling the quota to be set on the basis of scientific evidence. Reflecting the latest science, the UK is calling for a rollover of the TAC to decrease discards, increase the likelihood of achieving maximum sustainable yield by 2015, and improve the stock biomass. This outcome, together with our success in removing proposed restrictions on discard reduction programmes, means that our highly successful and innovative catch quota scheme, which effectively eliminates discards, can continue to grow and develop this year.

On fish quotas, where the scientific evidence showed that significant cuts in quota were necessary for the health of the stock, we accepted them—for example, in the case of North sea nephrops, Celtic sea herring and Rockall haddock—but where they were not justified we successfully managed to fight huge cuts to quotas across a number of different fish stocks. The proposed cuts to quotas were often not supported by the available evidence and would have led to an increase in the discarding of perfectly edible fish. Successes included mitigating a 55% cut in south-west haddock to 15%, a 48% cut in west of Scotland haddock to 30%, and overturning a 12% cut to a 6% increase in nephrops around Northern Ireland. Because a number of stocks are improving, we were able to increase quotas for them this year. For example, we secured increases in quota for plaice and sole in the channel, nephrops in the west of Scotland, and cod and whiting in the south-west. We are hoping to secure increases in many of the North sea stocks, in line with the scientific advice, as part of the EU-Norway discussions next week.

Through the night the UK team battled hard to reach an agreement that ensures the long-term sustainability of fish stocks while providing short-term catching opportunities for our fishing industry. The package we secured helps all sectors of the industry, large and small, and delivers benefits for all parts of the UK—north, south, east and west. It was a good result for the UK fleet and for sustainable exploitation of the fish on which our fishermen depend. It also supports our wider objectives on the reform of the common fisheries policy, and it was a timely coincidence that the European Parliament was voting on CFP reform at the same time that the annual quota negotiations were taking place. I was very pleased that ambitious provisions to eliminate discards, set fishing rates sustainably and allow for regional decision making were voted through. This was an important step forward for the reform process, and it bodes well that the final package we will negotiate this year will include the radical reforms we all agree are needed.

13:24

[Mr Tom Harris (Glasgow South) (Lab)]

I thank the Minister for advance sight of his statement.

I sympathise with the Minister for being forced to sit through the night at the Fisheries Council at the end of last year in what I am confident he would describe as a Kafkaesque experience. Does he agree that our fishing industry deserves better than this undignified and often chaotic annual round of negotiations each December? More to the point, does he agree that public and industry confidence in the negotiation framework would be enhanced by a substantial degree of transparency? By holding meetings behind closed doors, the Council prevents us from evaluating the logic behind its decisions. What measures does the Minister plan in future to open up these negotiations to a healthy dose of public scrutiny?

We are at a critical point for fisheries management, and common fisheries policy reform is at the top of the agenda. May I wish the Minister every success during the EU-Norway negotiations on the North sea cod quota next week? Labour Members welcome the news that automatic cuts to the North sea cod quota and a reduction in the number of fishing days at sea have been avoided. Given public outrage at the shameful waste of discards, any change in policy that increased discards would have been unacceptable. Is the Minister aware of concerns within the fishing industry that the vote by the Council of Ministers to amend the more problematic parts of the cod management plan could be subject to legal challenge from the European Parliament? Can he guarantee that the Council’s vote will not be overruled by the outcome of such a legal challenge?

The Minister told the House that proposed cuts to quotas were “often not supported by the available evidence”. Will he give us examples? Can he confirm that despite the Council’s, and his own, public support for evidence-based policy-making, about half of all quotas have been set above levels advised by the International Council for the Exploration of the Sea? He reported that the Council was able to increase quotas for those stocks that are improving. Can he confirm to the House that all these quota increases were unambiguously supported and recommended by the scientific evidence?

What discussions, if any, took place at Council regarding the ongoing dispute between UK and Icelandic fishermen on disputed north-east Atlantic mackerel stock? Was the Minister personally involved in any discussions on the possible enforcement of EU sanctions against Iceland and the Faroe Islands, and will he update the House on this crucial issue?

Is the Minister fully aware of the increasing importance to Scottish processing plants of the blue whiting quota, and will he bear this in mind as he approaches the EU negotiations with Norway next week? Total allowable catch for blue whiting increased significantly in 2012 but is still constrained by our commitment to swap quotas for North sea cod with Norway—a move that largely benefits Spain and Portugal.

Lastly, given the importance to these annual negotiations of quota distribution within the EU, will the Minister update the House on when he expects to be able to publish the full, comprehensive and up-to-date list of who owns the UK fishing quota, long promised by this Government?

I welcome the Minister’s statement and wish him every success in future negotiations. So long as he continues to represent the fight for the sustainability of the UK’s fishing industry and of our vital natural resource, he will continue to enjoy our conditional support.

[Richard Benyon]

I would expect nothing less from the hon. Gentleman.

I thank the hon. Gentleman for his sympathy about the absurd and ridiculous processes that one has to go through. With the reform of the common fisheries policy, we have a golden opportunity to end some of the absurdity, if not all of it. We can cease the ridiculous charade of a Minister like me discussing fishing net sizes with a Commission official perhaps 1,000 miles from where the net will be used. That is a technical matter that should be decided locally with fishermen. That is why our regionalisation agenda as part of the CFP reform is so important.

The system can also be improved through better long-term management plans. The cod recovery plan is a bad plan, but that should not dissuade us from pushing for more long-term management plans that are scientifically based and worked through with the industry, taking away from politicians the late-night horse trading and making the system much more evidence based. We want to see more of that.

The hon. Gentleman raised an issue about cod. Where cod effort continues to be reduced, the incentive is then for fishermen to fish as soon as possible after leaving port, and that might not be the most sustainable place for them to catch fish—it might be where cod are spawning or where there are more juvenile fish. We want to encourage them to go to the places where there are the larger fish that they can target sustainably.

The hon. Gentleman asked whether this will be subject to a legal challenge. It may well be—these things happen. I was very clear that I did not want the livelihoods of our fishermen or the sustainability of our seas to be the totemic issue on which inter-institutional rivalries would be sorted out. Therefore, the decision we took to support the presidency in sorting out this element of the cod recovery plan was the right one. It may well end up in court and I cannot guarantee the result, but we have secured a sensible solution for this year.

The hon. Gentleman asked about the advice of the International Council for the Exploration of the Sea. ICES looks at individual fish stocks rather than, as is the case in this country, mixed fisheries, so we do apply other scientific advice. On cod, we got ICES to agree that our rationale was right that if we had progressed down the route proposed by the Commission, it would have resulted in more discards.

Mackerel remains our absolute priority. It is this country’s biggest by-value catch and I am determined to do all we can to get Iceland and the Faroes back to the negotiating table and find a solution. If not, sanctions remain on the table.

I will write to the hon. Gentleman about blue whiting, because that is a more technical issue.

We inherited an extraordinary situation whereby we do not know who owns quota in this country, which is daft. We have set about our determination to resolve that issue this year, so I hope that at some point in 2013 we will be able to explain to the House whether or not quota is actually owned by football clubs and celebrities, as is constantly made clear to me. We have yet to find out and are working hard to achieve that.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I congratulate the Fisheries Minister on enduring the final throes of an out-of-date policy. Could he assure the House that cod quota will be extended to our hard-pressed, initial under-10 metre fleet? That is extremely important.

On the common fisheries policy, it is music to the ears of fishermen that we are proceeding on the grounds of sustainability, sound scientific advice and, indeed, a discard policy that should work. Will he assure the House that regional control will amount to control by him and his colleagues for the North sea fishermen and, indeed, by the fishermen and the regional advisory councils themselves?

[Richard Benyon]

I thank my hon. Friend for her remarks. Yes, I can confirm that cod is an important stock for the inshore fleet as well as for others. It is welcome that cod stocks are increasing. That is in so small part thanks to the work being done by fishermen in all sectors to improve the biomass of this important staple of our diet. It is not entirely good news—there are still cuts to cod quotas in some areas—but the general trend is increasing. We need to reflect on the fact that 1 million tonnes of cod will be caught off Norway and in the North sea this year. This stock is improving dramatically not very far from us. It is not improving quickly enough, but we are working hard to achieve that.

I agree with my hon. Friend that sustainability is important, not just because we mind about the health of our seas, but because we mind about the future of our fishing industry. We want an increased biomass and it is through increased stocks that more businesses will progress and become more profitable.

I absolutely concur with my hon. Friend’s comments on regional management. My right hon. Friend the Secretary of State has been banging this drum for a long time. We want fully documented fisheries where the technical measures that are currently decided by a top-down centralised system are decided locally on an ecosystem basis, so that in an area such as the North sea it is the countries that actually fish in it that will decide how it is managed.

[Mr Frank Doran (Aberdeen North) (Lab)]

I join in congratulating the Minister on this very good result that is obviously welcomed by the fishing industry. He is well aware of the trials that are taking place in Scotland to improve discards. The Scottish Fishermen’s Federation is anxious that they progress as quickly as possible and feel that it would be extremely beneficial to have an extra quota of fish specifically to pursue the research. Is the Minister prepared to argue for that in next week’s Norway discussions?

[Richard Benyon]

What we managed to achieve was to get the argument understood. We are not talking about more mortality; we are talking about landing more fish that would otherwise be discarded. The hon. Gentleman is right to say that fishermen from his part of the world have led the way on a whole range of measures. Some have been technical and have involved their gear, while others have involved real-time closures, but the really important scheme is the catch quota scheme, which has involved fully documented fisheries. The scheme has been praised from the commissioner downwards as the way forward. We want it to become the norm and, in many respects, for it to be much extended, because under that scheme practically no cod will be discarded from vessels this year. That is an incredible achievement by those fishermen and the people who have worked with them on such schemes, and we want to see more of that.

[Mr Speaker]

I congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on his CBE in the new year’s honours list. I also congratulate his hon. Friend the hon. Member for Mid Dorset and North Poole (Annette Brooke) on her OBE in the same list.

[Roger Williams (Brecon and Radnorshire) (LD)]

Thank you, Mr Speaker.

I, too, congratulate the Minister on the tremendous progress that has been made on regionalisation. It has long been an ambition of the UK Government that more decision making and management of the common fisheries policy be done locally. Could he give us other examples of how this will benefit the UK fleet and ensure that it has a happy future?

[Richard Benyon]

I, too, congratulate my hon. Friend on his recent honour.

Many benefits can be achieved from proper, effective regionalisation. Ending the top-down, centralised control of small and detailed technical measures is an important way forward. Ensuring that local fishermen work with scientists and developing the concept that every single vessel is a scientific platform can only be achieved locally. We cannot achieve what we want to achieve on discards without regionalisation. It has been a real battle to push this through the Council and other forums. I am really pleased that the fisheries committee of the European Parliament recognises this. We now have to make sure that it is followed through in the bizarre processes that we have to go through for the rest of the year, in order to ensure meaningful reform. I assure my hon. Friend that this is a priority for us.

[Kelvin Hopkins (Luton North) (Lab)]

The Minister will recall that I have called on a number of occasions for the abolition of the common fisheries policy and for the Government to press that on European colleagues. I still believe that we should do that. Would it not be sensible to return to the national limits that we used to have, so that we can manage our fish stocks and monitor our fishing? That is how the Norwegians do it, and their fisheries are much better than ours.

The question that I really want to ask relates to Spain, which has in the past refused to give information about its fishing. Indeed, there have been suggestions that it is landing black fish illegally. Is Spain being properly regulated now?

[Richard Benyon]

Sadly, Spain is not alone in having had problems in the past with black fish landings. We have to make sure that all houses are in order when we criticise countries for failing to obey the rules. I want to make it absolutely clear that if people land black fish—illegal, unreported and unregulated landings of fish—they are stealing those fish from our fishermen. People such as the hon. Member for Aberdeen North (Mr Doran) have made that important point consistently.

The hon. Member for Luton North (Kelvin Hopkins) is consistent in his view of the common fisheries policy. I certainly would not have started from this point, and I think that most Members would agree with that. As we develop the policy further, we need to recognise that the “common” part of the common fisheries policy is not necessarily wrong. We need to manage this on an ecosystem basis. Fish may spawn in one country’s waters and then swim to those of another country. They do not have passports and we need to manage the situation on a sea basin basis, and that is where our regionalisation agenda is going.

[Sheryll Murray (South East Cornwall) (Con)]

Does my hon. Friend agree that the Commission’s draconian and inflexible stance, particularly on stocks with a precautionary, rather than an analytical, TAC, is a clear reason why management and decision making should be devolved to the local nation states that have a real interest in the sea basin area? Will he argue for that in the CFP review negotiations?

[Richard Benyon]

I thank my hon. Friend for her continued interest in this issue. Her knowledge is important in guiding us and making sure that we are on this agenda. I assure her that we are. I want fishermen from her part of the world to take responsibility for the detailed management, technical measures and other sustainability issues that we require of them, rather than feeling that yet another layer of control is being imposed on them. That is what is driving people out of the industry and making fishermen feel that they do not want their children or grandchildren to go into their industry. I am determined to see a degree of regionalisation that is effective in delivering that.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I am sorry to tell the House that we have got through only five questions in nine minutes of Back-Bench time, which is very slow progress. We need to speed up, I am afraid, if we are to accommodate colleagues and move on to the next business in a timely fashion.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his hard work and effort on behalf of the fishing industry, especially in Northern Ireland, and for working with the Minister in Northern Ireland. Along with Diane Dodds, I met the Minister the day before he went to Brussels to put the case for the Northern Ireland fishing sector. The 6% increase in nephrops is most welcome, especially for the Northern Ireland fishing fleet. What plans does he have to address the growing problems associated with Irish sea cod, particularly in area VII, and the assertion of the Scientific, Technical and Economic Committee for Fisheries that science suffers from annual TAC reductions?

[Richard Benyon]

I understand the hon. Gentleman’s concerns. I am pleased with where we got to on nephrops.

On the technical issue of Irish sea cod, I think that we can slightly ameliorate the impact of the cut. Working with fishermen in his constituency and the STECF, I hope that we can move the argument forward. Great work is being done by fishermen in Northern Ireland on selectivity, and I encourage that. I want to achieve the holy grail of fisheries management, which we are achieving elsewhere: catching less and landing more. We can do that.

[Martin Vickers (Cleethorpes) (Con)]

My constituency and neighbouring Grimsby broadly welcome the negotiations and, in particular, the moves towards regionalisation. However, the Minister will be aware that there are concerns that the negotiations between the EU and Iceland over mackerel catches may lead to lower imports into this country, which are vital to the Grimsby-based industry. Will he give the industry in my constituency some reassurance?

[Richard Benyon]

I visited my hon. Friend’s region not long before Christmas and that point was made very clear to me. I recognise that we have a very valuable processing industry that we want to protect. In large part, it is dependent on fish from Iceland. If sanctions are brought in against Iceland, we want to ensure that they are proportionate. We think we can exert some influence in this area and get Iceland back to the table, so that we can start seeing proper management of a stock that swims across a vast area that is the responsibility of many countries.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

On behalf of the Scottish and UK fishing industries, may I congratulate the Minister on a job well done? Will he give the House an assessment of whether Scotland’s fishermen would have benefited from having a separate delegation or whether we are better together?

[Richard Benyon]

My view is that Scotland’s fishermen are best represented as part of a large, 29-vote member of the European Union. That is true of a lot of other interests. I cannot do the maths off the top of my head to work out how many votes Scotland would have as an independent state, but I think that it is best served by being part of the United Kingdom in these negotiations.

[Laura Sandys (South Thanet) (Con)]

I congratulate the Minister on behalf of myself and the fishermen of Ramsgate. Will he elaborate on the impact of the settlement on the under-10 metre fleet, in particular in the channel?

[Richard Benyon]

We achieved an increase in the quotas for sole and plaice in my hon. Friend’s area and a roll-over of the sprat quota, which was due for a big cut. Those are all valuable fisheries for her constituents. I am gratified that fishermen in her area are part of our trial for more financial support for the under-10 metre fleet in the coming year.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

There is much to welcome in the Minister’s statement. I commend him and the devolved Ministers for their efforts in recent weeks. I, too, want to press the Minister on the mackerel dispute, which is still at an impasse. Will he give an assurance that he will reject the Commission’s proposals for reductions in mackerel quotas next week at the EU-Norway talks, because that would simply reward Iceland and the Faroes for destructive overfishing and fail to pull them back to the negotiating table?

[Richard Benyon]

I am sure that the hon. Lady, like me, wants to ensure that we stay resolute in our determination to follow the science. We have a political issue to sort out with the mackerel problem and that can be done only by getting Iceland and the Faroes back round the table. I do not want the United Kingdom to fish the last mackerel out of the sea. We want to ensure that the stock remains sustainable. I feel very unhappy about the impact that this situation could be having on her constituents and on those whom I have met in Lerwick and in other places where mackerel is an important fishery. We want to ensure that Iceland and the Faroes play ball, but we cannot allow this stock to be fished unsustainably.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I thank my hon. Friend for all that he has tried to do for the under-10 metre fleet. Will he say more about how the “non-sector” will be affected by the settlement, in particular people fishing out of Harwich, Brightlingsea and Wivenhoe, a fleet that he knows well?

[Richard Benyon]

As I have said, there is good news for the under-10 metre fleet, which is particularly effective at targeting stocks such as sole and plaice. There is quite a large increase in the plaice quota and we managed to avoid a big cut in other stocks by presenting the science and working with my hon. Friend’s constituents who fish sustainably. The under-10 metre fleet can feel proud of their contribution towards the sustainability of our fishing industry and I commend those in his constituency for that.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The Minister has taken a sensible approach to the dispute over mackerel with Iceland and the Faroes. In the discussions that he and his colleagues have with them, will he ensure that the point is made that they will be the biggest losers if there is an unsustainable approach to mackerel fishing in the North sea? It may be attractive to Iceland to get immediate economic returns from the mackerel stock, given its current economic situation, but it would not be in that country’s interest to see the stock diminished beyond recognition.

[Richard Benyon]

There is a perfectly acceptable international method for resolving these disputes, but it requires countries such as Iceland to take part in the process. We remain willing to discuss the matter with them in an open and meaningful way. The ball is in their court. In the meantime, this is a difficult time for the industry, with the threat to the viability of the pelagic fleet. I assure the hon. Gentleman that we remain absolutely committed to ensuring that bad practice is not rewarded and that we are working hard to achieve a happy solution to this problem.

[Dr Sarah Wollaston (Totnes) (Con)]

I congratulate the Minister on securing an increase in the quotas for cod and whiting in the south-west and for plaice and sole in the channel. How quickly does he think it will be possible to roll out the catch quota scheme to further eliminate discards?

[Richard Benyon]

I was really pleased that fishermen in my hon. Friend’s constituency entered the scheme last year. I want many more vessels to do so, because fully documented fisheries are the only way forward, not only to have proper management of our fisheries, but to address the concerns of all our constituents—even mine inland—who are affronted by the idea of perfectly edible fish being thrown away. Through schemes such as the catch quota scheme we can give assurances to our consumers and make life better for our fishermen, who are landing more and being better rewarded for it. This is an entirely virtuous circle.

[Peter Aldous (Waveney) (Con)]

I, too, congratulate the Minister on his work in the negotiations before Christmas and over the past two and a half years on behalf of the under-10 metre fleet. There is concern that in future work on the reallocation of quota, the under-10s will be compromised by not having kept records. Will he confirm that he will work with the industry to address that concern?

[Richard Benyon]

I hope my hon. Friend would concede that I am on record as having faced criticism from some quarters for reallocating quota to the under-10 metre sector. I strongly believe that fishing opportunity is a national resource, and this rather bizarre business is about the allocation of that national resource. I firmly believe that the under-10 metre sector is important socially as well as economically, and I will continue to do what I can to make its life better.

[Andrew George (St Ives) (LD)]

I warmly congratulate my hon. Friend the Minister on both what he has achieved and the manner in which he has conducted the negotiations. He mentioned the context of the common fisheries policy reform. Will he reassure the House that his counterparts in Europe will respect the fact that we are introducing marine conservation zones that extend beyond the six and 12-mile limits, to ensure that British fishermen are not constrained in areas where foreign vessels are not?

[Richard Benyon]

My hon. Friend is absolutely right, and that is really important. I am not in the business of proposing restrictions for our vessels only to see vessels from other countries entering the restricted areas in our waters and fishing in a way that our fishermen cannot. We must have the matter agreed at European level, and I have already had discussions with my French counterpart on it. We will have further discussions to ensure that it is completely clear at every level that we are not imposing a restriction on ourselves that will not be recognised by other countries.

[George Eustice (Camborne and Redruth) (Con)]

I welcome the Minister’s success in getting the scientific evidence heard, particularly when it comes to haddock in the south-west. Why were the Commission’s original proposals so far wide of the mark, and why is it apparently so dysfunctional on the issue and so deaf to the evidence?

[Richard Benyon]

The issue of haddock in the south-west is a product of the situation that I mentioned earlier, whereby the International Council for the Exploration of the Sea simply examines one stock on its own. In most of the UK waters we have mixed fisheries, and there is a danger that we can—I have already used this expression in Committee today—make the perfect the enemy of the good. If we are tied to one species, in this case a “choke species”, it can result in more discards and worsen the sustainability of wider stocks. That was why we argued successfully for a reduction in the cut.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I am sure that the fishermen who fish in Sole bay will be delighted by the increase in eastern channel sole, as will those in Southwold, Orford, Sizewell and elsewhere in my constituency. Does the Minister share my concern, though, about the comments of the chief executive of the New Under Ten Fishermen’s Association that the deal was damaging, when it has actually proved a lifeline for many of our coastal fishermen?

[Richard Benyon]

I think the chief executive’s comments were a pity, because if he had looked closely at what we achieved he would have seen an improved prospect for the year ahead across all sectors and around all our coasts. That includes some valuable stocks that are of particular interest to his members, so I accept my hon. Friend’s point.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

May I add to the chorus of congratulations from Members on both sides of the House on the Minister’s his genuine achievements? In particular, the increase in the nephrops quota will be most welcome in Fleetwood and is a real success. Now that he is back, may I ask him to keep an eye on the new wind farm applications in the Irish sea so that there might be some space left for my local fishermen to catch the new quota?

[Richard Benyon]

My hon. Friend may try you, Mr Speaker, but I listened to what he said. I want to ensure that we get away from the silo mentality in managing our fisheries of talking about fishermen in one forum, conservation in another and other marine activities in a third. Following the Marine and Coastal Access Act 2009, we are moving towards much more holistic management of our seas, which is right.

Regulation of Bailiffs

Tuesday 8th January 2013 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

13:54

[Mr Jim Cunningham (Coventry South) (Lab)]

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to introduce a regulatory regime for bailiffs which would preclude the making of multiple fee charges without explanation; to introduce guidelines for dealing with potentially vulnerable debtors; and for connected purposes.

Concerns about the practices of bailiffs are not new, nor has the issue simply gone ignored. Governments have been aware of the concerns for decades. Action on the matter, however, has proved slow at best. I do not wish to make a party political issue of it, and I am aware of cross-party concerns about bailiff practices. Before I continue, I wish to thank the Coventry Evening Telegraph for the investigative work that it has undertaken into the matter. Many of my examples have been drawn from the paper’s investigation.

Those of us wanting reform of the bailiff system were given hope when, in February last year, the Government announced a consultation on bailiff reform. The consultation duly went ahead and closed in May 2012. I am aware of the disappointment felt by many in the industry regarding the scope of the consultation, but many have been optimistic that it could lead to real change. However, the report on the consultation was due to be published in October. As might be expected, every month that passes with no word from the Government diminishes hope about their commitment to the issue. I understand that the report is due to be published this month, and I very much hope that that will be the case. I therefore want the House to signal to the Ministry of Justice that we place great importance on bailiff reform.

Another reason for the lack of faith in the forthcoming report is that the Department in charge consulted 16 organisations and introduced the national standards for enforcement agents in 2002. Those standards remained unchanged for nine years and were clearly in need of updating. Many people were therefore delighted when the then Justice Minister, the hon. Member for Huntingdon (Mr Djanogly), announced last January that the national standards had been updated. He said that the voluntary code had been tightened to protect people from rogue bailiffs, and stated:

“Councils and other authorities will adopt the standards”.

I do not know on what basis he could make those claims, given that the standards remain voluntary.

What is most concerning, however, is that on close inspection of the updated standards, it appears that only six sentences were added to the original standards. Only one sentence was changed in the section on information and confidentiality, adding the words

“avoiding unnecessary and unhelpful use of legal and technical language”.

No changes were made under the headings “Complaints/Discipline”, “Vulnerable situations” or “Goods”. I was also shocked to discover that most of the new material had been taken almost word for word from the new Office of Fair Trading debt collection guidance.

In updating the standards, the Ministry of Justice consulted only two organisations, compared with the original 16. Anyone looking for a meaningful change in standards for bailiffs must be extremely disappointed. Based on the Ministry’s last announcement regarding its efforts to address bailiff reform, in my eyes there is reason to be pessimistic about the Government’s forthcoming proposals. Nevertheless, I wish to take this opportunity to raise a number of recommendations that have been made, in the hope that the Ministry will take them into consideration.

The first recommendation is to eliminate the practice of making multiple fee charges for a single visit without explanation. I believe that in calling for that, I am asking for something modest. The local government ombudsman has recognised that the practice is legal and not uncommon, but she has also ruled that in many cases it is disproportionate. She has urged councils to enter into new contracts with bailiffs preventing multiple fee charging.

An example from Coventry might be helpful. Coventry council’s hired bailiffs recently sent 10 threatening letters in two days demanding that a disabled woman pay her debts in full immediately or face the loss of her possessions. That was despite her already having begun a payment plan. The bailiffs charged her five lots of £95 for a single visit to her house, which cannot be right, reasonable or fair.

There are many reports of bailiffs charging multiple fees for a single visit or bill, and the debt escalates rapidly. Such practice is too prevalent for us to continue relying on individual contracts with private bailiff firms. Let me reiterate that such cases are not unique to Coventry council and it has not behaved illegally. I hope, however, that all hon. Members will agree that such things should not be allowed to happen.

We are failing vulnerable people facing bailiff action. A cancer patient in Coventry missed just two council tax payments before receiving a court summons and a demand for the full up-front payment, together with the threat that her home possessions might be taken away. The bailiffs added another £200 costs and appear to have wrongly threatened her with prison. In that case, the bailiff firm seems to have accepted that it failed in the guideline “duty” on bailiffs to hand cases back to councils as soon as any potential for vulnerable circumstances is identified, so that councils may handle such cases more sensitively. There are many other examples from my constituency of vulnerable people trying desperately to persuade private bailiffs of their situation but simply being ignored. Such cases include a women who was suffering from severe depression and deemed at risk of suicide.

National standards for enforcement agents make it clear that bailiffs should exercise discretion when dealing with debtors who may be vulnerable. The standards state that potentially vulnerable people include those with a disability, but do not mention debtors who have mental health difficulties or who may be vulnerable by virtue of other difficulties—for example, those facing homelessness.

A bailiff might be the first person in the process to realise that a debtor is vulnerable, and we need much closer regulation of how to handle vulnerable debtors than currently exists. Private bailiff firms must be forced to inform councils of vulnerable cases. At the moment, administrative oversights, mistakes and unclear protocol can result in vulnerable people becoming the victims of aggressive or inept practice by bailiffs. I therefore hope to see a drastic change to the guidelines on how vulnerable people are treated in our private bailiff system, and I hope that all hon. Members will agree on the need for change.

This issue was discussed before Christmas in another place during a debate on an amendment to the Crime and Courts Bill, and I urge the Government to take on board the many sensible and important points made then, particularly regarding a full regulatory system for bailiffs. I call on the Government to consider the recommendations in the recent local government ombudsman report, “Taking possession: councils’ use of bailiffs for local debt collection”. The report covers a number of issues and provides recommendations based on the ombudsman’s considerable experience of complaints.

In conclusion, I appreciate the importance of debt collection to councils’ revenues, particularly in these times of austerity. Faced with cuts to council budgets, Coventry council has set a target under the bailiffs’ contract to reduce council tax debts from previous years by about 40%, and many other councils are in similar situations. We can therefore expect private bailiff firms to continue to be necessary to a certain extent, but we should make whatever arrangements are necessary to prevent the worst practices—whether due to incompetence or greed—such as multiple fee-charging, and protect the most vulnerable in society at an extremely distressing time. I hope that the Government will take my comments on board in the upcoming report, and that we will finally see radical change to our mediaeval bailiff system. I hope we will achieve a system that is reasonable, legal and proportionate, and I commend my Bill to the House.

Question put and agreed to.

Ordered,

That Mr Jim Cunningham, Thomas Docherty, Mr Geoffrey Robinson, Grahame M. Morris, Mr Tom Clarke, Sir Bob Russell and Mr David Winnick present the Bill.

Mr Jim Cunningham accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 25 January, and to be printed (Bill 117).

Welfare Benefits Up-rating Bill

Tuesday 8th January 2013 Commons Chamber

Second Reading

[Mr Deputy Speaker (Mr Nigel Evans)]

Before I call the Secretary of State to move the Second Reading debate, I inform the House that the amendment has been selected.

14:05

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I beg to move, That the Bill be now read a Second time.

The Bill, which stands in my name and that of my right hon. and hon. Friends, is about the renewal of what I believe is a principled welfare state based on affordability, integrity and fairness. For the convenience of the House, let me explain that I intend briefly to run through the features of the Bill, and I will then open up the debate to take interventions and deal with the amendment.

This Government inherited from the previous Government an unsustainable and costly system, and a welfare state that I believe delivered poor social outcomes, trapping people in dependency, as well as a poor deal for Britain’s taxpayers. My opposite number, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), needs no reminder of that as it was he who, when we arrived in government, told us that there was no money left. That was the result of a recession that was later discovered by the Office for Budget Responsibility to be deeper and sharper than anyone thought. The original estimate—

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

rose—

[Mr Duncan Smith]

I will give way in a moment. I am in the business of having the right hon. Gentleman justify his own position so I will be happy to give him a chance, but let me finish this point. The previous Government originally claimed that the shrinkage in the economy was 5.8%. In fact, as the OBR later pointed out, at 6.3% the shrinkage was deeper than we had ever seen before—the biggest shrinkage in the economy since world war two.

[Mr Byrne]

I am grateful to the Secretary of State for giving way so early in the debate. Will he confirm to the House that on his watch the welfare bill has risen nearly £14 billion higher than anticipated?

[Mr Duncan Smith]

I am glad that the right hon. Gentleman raises that point because a huge part of that is spending on pensions. He will know that we are spending more on pensions and provide a better deal for pensioners than his Government ever did. Until this Bill, the Government continued to raise welfare payments in line with inflation; this is the first time that we propose not to do so. That will take effect through the uprating order that should be laid before Parliament later this month. The Bill provides that discretionary working age benefits and tax credits will be uprated by 1% for a further two years in the tax years 2014-15 and 2015-16, if prices have risen by at least 1%. The schedule to the Bill sets out the benefit payments and tax credits in question, which are listed in full in the explanatory memorandum. By providing for those changes in legislation, we can provide certainty for taxpayers, the markets and claimants.

A number of exceptions to the Bill are not included, and a number of benefits remain outside the scope of the Bill. We are maintaining our commitment to the triple lock so that the basic state pension will rise by 2.5%. In April 2013, pensioners will see an increase of £2.70 on last year—far more than the derisory 75p that Labour gave them in 2000—and I stress again that we introduced the triple lock to guarantee that. Crucially, we are also protecting disabled people and carers. Benefits to cover the added costs faced by these groups will continue to be linked to price inflation.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I will give way in a moment. That includes carer’s allowance, disability living allowance, and new personal independence payments, as well as premiums paid to disabled people receiving working age benefits such as the disability additions in tax credits, and the support group component of employment and support allowance.

[Several hon. Members]

rose—

[Mr Duncan Smith]

The hon. Member for Edinburgh East (Sheila Gilmore) was first.

[Sheila Gilmore (Edinburgh East) (Lab)]

The Secretary of State has stated that benefits have been raised in line with inflation, but he did not say that tax credits— 2,000 people who are affected by the Bill are in work and receiving benefits such as tax credits—have not been increased for the past two years. In fact, they have been frozen.

[Mr Duncan Smith]

It is interesting that the hon. Lady raises that point, because under the Labour Government, tax credits absolutely boomed. In 2005, there were increases of 58%. Overall, there were 340% increases in tax credits, 70% of which goes to child tax credits. The hon. Lady says that tax credits should continue to rise, but she can make that argument in due course.

[Helen Goodman (Bishop Auckland) (Lab)]

Will the Secretary of State admit that the social security budget is going up on his watch because unemployment is rising faster than his colleague expected?

[Mr Duncan Smith]

Never let a good fact get in the way of a good argument. Unemployment is falling, youth unemployment is falling, more women are in work than ever on her watch, and long-term unemployment is flattening out. The reality, therefore, is that we have better employment figures—there are 1 million new private sector jobs, which outweighs the public sector jobs we have had to get rid of. The reality is that the rate of unemployment, at 7.8%, is better than the EU average and better, almost for the first time, than the United States of America.

[Mr Byrne]

It is significant that the Secretary of State has just admitted for the first time that welfare spending on his watch is rising £14 billion higher than projected. Will he go a step further and confirm his understanding of the OBR figures that show that the claimant count is forecast to rise by a third of a million more than anticipated over the next few years? Will he admit that, yes or no?

[Mr Duncan Smith]

I should remind the right hon. Gentleman that the claimant count was forecast to rise but has fallen throughout all those forecasts. I know it is inconvenient for the Opposition, who would rather unemployment rose than fell, but unemployment is falling. Many countries in Europe would give their eye teeth for the employment figures in this country.

[Derek Twigg (Halton) (Lab)]

On disabled people, paragraph 24 of the Secretary of State’s impact assessment, which has just been published, states:

“Nevertheless, despite this protection…those households where someone describes themselves as disabled, (under the DDA definition) some of whom will not be eligible for a disability benefit, are more likely to be affected than those where there is not a person”

in that category.

[Mr Duncan Smith]

There are two good reasons for that. First, families in which there is some disability are often more likely to include people who have claims on other benefits. Some of those will be affected by the change.

[Derek Twigg]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

No. That is exactly the reasoning behind what the impact assessment says. The second reason is that, as part of employment and support allowance, the support group is protected. However, people who are described in the terms of the Bill as qualified under the Disability Discrimination Act 1995 and are not in the support group will find that they will be affected by the 1% increase. Therefore, by and large, the benefits for those who are disabled and qualified as disabled, and for those in receipt either of support payments in ESA, disability living allowance or the premiums in many other benefits, are being uprated in line with inflation—[Interruption.] May I finish? The only benefit that is not being uprated in line with inflation is ESA for those not in the work-related activity group. Some of those with disability will be affected because many in their households will be on other benefits. That is the reason.

[Derek Twigg]

rose—

[Mr Duncan Smith]

I think I have dealt with that particular point and will move on—[Hon. Members: “No!”] All right, I will give way to the hon. Gentleman again.

[Derek Twigg]

I thank the Secretary of State for giving way, but I am not clear about what he has just said. Will he confirm his impact assessment, which states that

“despite this protection …those households where someone describes themselves as disabled, (under the DDA definition) some of whom will not be eligible for a disability benefit”—

this is the crucial point—

“are more likely to be affected than those where there is not a person who describes themselves as disabled”?

Does he agree?

[Mr Duncan Smith]

I have just told the hon. Gentleman that the reality is that someone in those households is more likely to be on benefits, but particularly ESA. Let me remind him and the Labour party that they introduced the changes to the work capability assessment and ESA. The Government inherited, modified and improved those measures, but they are part of the reason why that is in the impact assessment.

[Derek Twigg]

Will the Secretary of State give way?

[Mr Duncan Smith]

No. I have dealt with the hon. Gentleman’s point. The truth is that the Labour party is not only against the Bill but against what the Labour Government introduced just before the last election and the work capability assessment. Labour Members have opposed £80 billion of changes and reductions in every single vote and every single motion. I have dealt with his point. They must decide what they are in favour of when it comes to reducing the deficit; otherwise, they will be a laughing stock.

[Charlie Elphicke (Dover) (Con)]

Is not the bottom line that it is very difficult to justify 20% increases in benefits when earnings for hard-pressed families have gone up by only about 10%?

[Mr Duncan Smith]

It is worth pointing out to my hon. Friend that, when the Opposition originally heard about the Bill, the shadow Chancellor and my opposite number—the shadow Secretary of State—entertained the idea that what was wrong with the Bill was that it affected too many people who were in some kind of work through working tax credit. The speculation was that, somehow, they would be prepared to support, or not oppose, measures on those not receiving working tax credit. I notice that there is no mention of that position in the amendment, because they have been clobbered by their left and by the trade unions, their paymasters. Instead, there is a rag-bag amendment expressing opposition to a variety of things, which bears no relation to their previous position. There they go again, denying where they are.

The real question for the shadow Secretary of State and the shadow Chancellor, before they intervene again, is this: having opposed every single reduction to the deficit, what exactly would they do to cut it? They have not a single answer.

[Andrew George (St Ives) (LD)]

We have just heard that one justification for capping benefits at 1% is that, allegedly, benefits have risen significantly more than wages. In that case, would it not be wise for the Government to introduce a measure so that benefits do not increase by more than average wage inflation?

[Mr Duncan Smith]

As I have said, the Bill is about trying to bring that fairness back into the welfare payments process. As my hon. Friend the Member for Dover (Charlie Elphicke) has said, the reality is that in the period since the recession, payments for those in work have risen by about 10% and payments for those on benefits have risen by about 20%. We are trying to get a fair settlement back over the next few years. Eventually, benefits will go back on to inflation.

[Andrew George]

We do not know—the Secretary of State is probably more clairvoyant than I am—what food price inflation will be in, for example, 2016. We are being asked to predict what the circumstances will be in the context of the rather arbitrary figure of 1%. I simply urge my right hon. Friend to keep an open mind, and to have a means by which we will uprate that is fair to both benefit recipients and those in work.

[Mr Duncan Smith]

I accept the point about fairness—that was my point—but the reality is that the Bill is also about getting the overall welfare bill down and in kilter. As I have said on the radio and again today, the key is that we must reduce the deficit—that is at the heart of the measure. The Liberal Democrats joined us in the coalition. I should remind the hon. Gentleman that the No. 1 priority we face is reducing the deficit that Labour left us—the biggest deficit on record of any Government since the second world war. That is the reality, but Labour Members are in denial, so I will move on.

The reality is that affordability—

[Several hon. Members]

rose—

[Mr Duncan Smith]

I will give way in a minute—I want to make progress and I have been quite reasonable in giving way.

First and foremost, under Labour public spending spiralled out of control—[Interruption.] Yes, it did. That left behind the UK’s largest ever peacetime deficit, and interest payments running at £120 million a day—[Interruption.] It is interesting that as soon as I speak about what Labour Members left behind, they go into denial. They try and shout me down because they do not like the sound of it. The reality is—

[Several hon. Members]

rose—

[Mr Duncan Smith]

I will give way in a minute. The reality is that the shadow Chancellor and the former Chief Secretary deny that they left a problem. It was a nightmare, and they should apologise and tell us what they would do to put it right.

[Mr Byrne]

I am grateful to the Secretary of State for giving way again: he is being typically generous. No doubt he, like me, will have looked at the DWP benefit expenditure tables, which show that spending on out-of-work benefits between 1996-97 and 2009-10 did not rise, but fell by £7.5 billion. That is why Lord Freud said that Labour’s record in getting people back to work was “remarkable” and noted that Labour had tackled the long-term dependency on unemployment benefits that it had inherited from the Tories in 1997.

[Mr Duncan Smith]

I notice that the right hon. Gentleman is very careful to avoid telling the House how much Labour spent on tax credits as well. The important point that Labour Members need to realise is that of the total bill for tax credits, 70% had no involvement with work at all. Child tax credits had no work agreement on them whatever. The reality is that Labour spent 340% more on tax credits, 58% before the 2005 election and 29% before the last election, in the hope of buying votes to get it out of difficulty. The result was that the debt we had to pay off was costing us £30,000 every single minute. That is what we had to pay as a result of that expenditure—

[Mr Byrne]

Will the Secretary of State give way?

[Mr Duncan Smith]

I am not giving way to the right hon. Gentleman again. I keep reminding him that he is the man who, when he left office, admitted that there was no more money left. He should apologise for that. Labour has opposed the £80 billion of savings that we have proposed. When he gets up again, he needs to tell the House what Labour would do to reduce the deficit and where it would find the savings. If he answers that question, I will give way to him.

[Mr Byrne]

My right hon. Friend the shadow Chancellor has set out far more about the difficult decisions that we would make than the Chancellor ever made. We have said that uprating of benefits should be slower; that there should be a two-year cap on contributory ESA; that there should be a reduction in disregards in tax credits; that there should be a benefit cap in different parts of the country; and that no one in this country should be allowed to live a life on welfare and languish for more than two years on JSA. The best way to bring the welfare bill down is to get people into work, not give them a failed Work programme.

[Mr Duncan Smith]

I remind the right hon. Gentleman again that we are getting people into work. Unemployment is lower than it was when we took office, youth unemployment is lower and we are getting more people into work. He said that he was in favour of the cap. That is very interesting, because he voted against the cap. He says that he is in favour of a number of issues, but he voted against the Welfare Reform Act 2012. He is against universal credit and the housing benefit changes. He has not agreed to any of the changes that we have made.

The overall bill for welfare rose by 60% between 1997 and 2010—

[Robert Halfon (Harlow) (Con)]

Is not the philosophical underpinning of this debate our wish to create a hand-back society, not a hand-out society? Is not cutting taxes on lower earners the best way to help those on low earnings, rather than recycling their hard-earned money through the benefits system?

[Mr Duncan Smith]

That is exactly the point. Labour Members think that helping people is about trapping more and more people in benefits. It is interesting that under the tax credits system, nine out of 10 families with children were eligible for tax credits, in some cases those with more than £70,000 in earnings. What a ridiculous nonsense they created.

Labour’s system was riddled with fraud and error. HMRC had to write off £4 billion in fraud and error payments and will probably have to write off another £4 billion, so £8 billion has been lost. This Bill is about finding savings of £1.9 billion, but as a result of tax credits Labour lost probably nearly £8 billion. That is the record of the last Government. They should apologise for the mess they left us in.

[Ian Paisley (North Antrim) (DUP)]

I appreciate the Secretary of State’s generosity in giving way.

I welcome the Secretary of State’s confirmation that pensions will not be detrimentally affected by the Bill. Can he confirm that in actual cash terms there will be an increase in benefits?

[Mr Duncan Smith]

That is correct. That is exactly what this Bill sets out. That will also be the case this year.

[Andrew Gwynne (Denton and Reddish) (Lab)]

I wish to take the Secretary of State back to the point made by my hon. Friend the Member for Halton (Derek Twigg) about disabled people. We have now gone from the Secretary of State saying that there is a blanket protection for disabled people to him acknowledging in the impact assessment that some disabled people will be affected by these changes. Given that recognition in the impact assessment, can he tell the House how many disabled people his Department estimates will be affected by these changes?

[Mr Duncan Smith]

I stand by what we said originally, and I say it again: in this Bill we have protected people on disability living allowance, as well as people in the support group on ESA. All the disabled premiums in JSA and so on are also protected. I do not know where Labour Members think they are going with all these points, because the reality is that they are basically opposed to absolutely everything. They would spend more money, they would tax more and they would borrow more, and the people who would suffer would be the British people who would have to pick up the bill. That is the reality.

I was making an important point about fraud and error. In essence, more than £10 billion was lost, and we do not even know how much was overspent, because Labour would not collect the figures. Writing off those debts wastes taxpayers’ money. To put this in perspective, the Bill sets out what we are doing at the moment to raise £1.9 billion, but that money could have been raised without difficulty had Labour’s system been better and more efficient.

It is also worth pointing out that, for many of the people Labour Members talk about, universal credit will improve their income dramatically. I have some very good examples of that. Under universal credit, a typical one-earner couple who have two children and rent their home will be £61 better off—including the changes today. A one-earner family with an income of £20,000 and two children will see a net gain of at least £34 a week. That will be a big boost for them and was not taken into consideration in the IFS figures.

The reality is that there is an issue about fairness, which we touched on just now. We should bear in mind that 70% of all households will not be affected by this legislation. Many of our constituents are taxpayers picking up the bill for all these costs, including the deficit and borrowing that the last Government left us. Over the last five years, following the recession, the gap has grown between what people in employment have been earning and what those on welfare have been getting. Those in work have seen their incomes rise half as quickly as those on out-of-work benefits—10% compared with 20%. That is not fair to taxpayers. Returning fairness to the system is critical, and it is one area that Labour refuses to acknowledge. Under the previous Government, taxes rose, borrowing rose and the deficit rose—and they left those bills for the next generation to pay. It is our job to get that under control. These are not decisions taken lightly or easily, but we have to take them and they are in denial.

The shadow Chancellor likes to sound off from a sedentary position. He likes to give it out but does not like to take it. I remember only a few weeks ago that he went around the studios complaining that we were too mean to him. If he does not like it, then he should stop making sedentary interventions.

[Mr John Redwood (Wokingham) (Con)]

Will the Secretary of State confirm that inflation can be particularly tough on people on low incomes who face small increases? Will he reassure people in the country that the Government and the future Governor of the Bank of England will be dedicated to getting inflation down, so that the value of benefits is not eroded more?

[Mr Duncan Smith]

Exactly. Mortgage rates are a critical component of what a household spends each year. Under Opposition plans, if interest rates had to rise because of their messy borrowing and spending, every 1% would cost another £1,000 on a typical mortgage. What have also done as a coalition, which we should be proud of and on which our coalition partners were very keen, is raise the tax threshold. That is taking more than 2 million people out of tax—people who were paying tax under the previous Government. That is serious help and an improvement of £165 a week for the average family.

[Kate Green (Stretford and Urmston) (Lab)]

I want to ask the Secretary of State about the people who are moving into low-paid work. Of the increase in employment in the past year, only 20% has been for full-time work, and so 80% has been for people who are by definition in part-time, and therefore probably low-paid, work. How will they benefit when he is capping the in-work benefits increase by just 1%?

[Mr Duncan Smith]

I will make two points to the hon. Lady. First, the vast majority of people who take part-time work choose to take part-time work. In all the studies we have—I am happy to let her have them; they are in the public domain—only 17% or 18% say that they did not want a part-time job, and wanted a full-time job, so she should not decry those who take part-time work. My second point is that that is why we are bringing in universal credit. Universal credit is about in-work and will be a huge support to those in part-time work, starting this year. The trouble with the tax credit system, which the Opposition are defending despite the fraud, the over-payments and the massive error, is that it lodged people into little silos where they could not move up, out of those hours. If a job moved from 16 hours to 17 or 18 hours, people did not do it because they could not afford to do it. Large numbers of lone parents, as she knows only too well, would rotate out of that and crash back out of work, because the job moved on and they could not stay with it.

The reality is that we are reforming the welfare system to make it better and easier for people who are in part-time work to have improved incomes. That is a part of this overall welfare programme that will deliver an efficient and even-handed system. It is right that the 1% applies across the board, including the tax credit system. As I said earlier about the overall numbers of people affected, of those working households, 20% of all households are affected by the Bill. If tax credits and child benefits were excluded, as the Opposition have prescribed, we would see a requirement to find a further £1.5 billion—yet another amount of money which they cannot say how it would be found. When in denial, like those on the other side of the House, one just votes against everything. A constructive Opposition would give us a proposal on how they would save that money.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

The Secretary of State has used the word “denial” twice. In previous Budgets and autumn statements, the Government talked about and acknowledged measured child poverty. However, in the most recent autumn statement and in the Bill, there is no mention of child poverty. Will he admit that under these plans child poverty in our country will go up and that that will come at a cost to us all?

[Mr Duncan Smith]

I will say two things about child poverty. First, we want to ensure that the figures published concern the years that this measure covers, and the year in which I will be introducing secondary legislation. The figures will be published next week in time for the debate—the Committee stage will be on the Floor of the House and everybody who is here today can take part.

Secondly, child poverty was calculated based on the median income line, and the previous Government lost control of it. Tax credits rocketed because they were chasing a moving line. As upper incomes rose, so did average earnings, and that is why they had to spend so much money. I remind the hon. Lady that they missed their targets in 2010 by 600,000 children in poverty. Since we have come in, the figures published this June show that child poverty fell by 300,000. I am not going to stand here today and try to claim credit for that fall. The figure fell because we saw the biggest fall in earnings for many years. Does that mean that because earnings fell child poverty has been solved? No, it does not. That is why we are consulting on a better way to measure child poverty.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The Secretary of State brandishes the figure of a 20% increase in benefits in the past five years. In cash terms, jobseeker’s allowance has gone up from just £59.15 in 2007 to £71 in 2012. In other words, in each of those past years JSA has gone up by just £2.50. Is it not the truth that this is a mean and miserable piece of legislation from a mean and miserable Government?

[Mr Duncan Smith]

I hear the hon. Lady’s point; I have to say that I do not agree with her. Benefits have risen, but if she would like to talk to those who are in employment on lower incomes in her constituency she would find that many have seen absolutely no rise in their incomes at all, and some even less than that.

[Jake Berry (Rossendale and Darwen) (Con)]

On that point, I was approached by a member of Manchester constabulary in my advice surgery recently. He said, “How can you justify putting out-of-work benefits up by 5.2% last year, when I have had a pay freeze and I risk my life every day?” Is that not the nub of the argument? People who are in work have to be treated fairly.

[Mr Duncan Smith]

I agree with my hon. Friend. I want to make some progress because he is absolutely right. The reality that Labour will not face up to is that the programme it has put forward is hugely costly.

I want to deal with the programme that Labour put forward in the past week, which I think is in the amendment before the House. I looked at it and it seemed very familiar. I remembered something, looking back over the past 10 years. I went back and had a look at the programme that the shadow Chancellor and his then boss, the then Labour Prime Minister the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) came up with. [Interruption.] I seem to recall that they came up with a programme called StepUp. The right hon. Member for Morley and Outwood (Ed Balls) was an adviser at the time. [Interruption.] Well, he was certainly very close to him. Is he now denying—[Interruption.] Well, there we have it finally: he no longer wants to have the former Prime Minister as his friend. More than that, from his sedentary position, he will probably deny that, late in the hour while the then Prime Minister was troubled and in difficulty, he did not come by taxi or by car to consult him and help him out. A denial of a friend is pretty cheap, and I think we will remember that.

The reality is that the StepUp programme, on which the Opposition have clearly based this new programme, was piloted in 20 areas between 2002 and 2004. It was never rolled out nationally, and I want to quote from the evaluation report. The StepUp programme was all about giving paid employment to people who had been out of work for some two years. The report stated:

“StepUp produces a very modest improvement in job entries…but this is below the level of statistical significance.”

In fact, each of those jobs would have ended up costing £10,000—a massive cost for a very small regard. When they did it—[Interruption.] Wait a minute. When they did it—[Interruption.] They do not want to hear about it. They made a bogus announcement and now they do not want to hear how useless it is. The work prospects of under-25s in the pilot got worse as a result of this programme.

Here is what happened. The Opposition were in a hurry during the Christmas recess, worried about being attacked for having no proposals, so the shadow Chancellor said, “Oh, I remember something we did under the man who used to be my friend, but is no longer my friend. I remember we had this programme.” So they decided to put that out and propose raiding pensions savings yet again to pay for a bogus programme. If anyone thinks for one moment that it would help anybody at all, let me tell them that it is more than a joke—it is pathetic. And it is pathetic that they have done it to try to get themselves off the hook.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

Has my right hon. Friend pondered this question? The Government are trying to ensure that the social security net works for people who need social security. When does he think that Labour decided that they were not interested in social security, only in bribing the electorate?

[Mr Duncan Smith]

It is in its DNA, so I am not sure when it started, to be honest. The tax credit system was out of control, as I said earlier on, because Labour was chasing a figure it could never reach, and as a result its spending was enormous.

In conclusion—

[Mr Byrne]

rose—

[Mr Duncan Smith]

No, I want to conclude. The right hon. Gentleman will have plenty of time to speak.

[Mr Byrne]

rose—

[Mr Duncan Smith]

Okay, I will give way in a second.

I want to remind the Opposition of what they have done. They have opposed £83 billion-worth of savings this Parliament. That is equivalent to adding another £5,000 of debt for every working family in the country. We hear much about taxing the rich, yet, in this Parliament, the richest will pay more in tax than in any single year of the previous Government—more tax on capital gains, more stamp duty—they will be less able to avoid and evade tax and they will pay more when they take out their pension policies.

We hear much about the bankers’ bonus tax, but Labour would have spent that money 10 times over. This is its great bankers’ bonus tax of £2.3 billion. Let us think about it very carefully. It would have overspent that to the sum of £25 billion—through reversing the VAT increase, more capital spending, reversing tax credit savings and reversing the child benefit savings. We are talking huge sums of money.

[Mr Byrne]

The Secretary of State has the temerity to criticise proposals we launched on Friday, when he is presiding over a Work programme that is literally worse than doing nothing. He stands before the House justifying the position of his Government, which is that it is possible to spend a life on welfare, but we say that is wrong. The way to bring welfare spending down is to get people into jobs, and when there are no jobs we invest in creating them.

[Mr Duncan Smith]

Our record on getting people into jobs is better than theirs. The difference is that Labour spent taxpayers’ money like drunks on a Friday night, with no care or concern for how effective it was. The work experience programme achieves what the future jobs fund did, but at a fraction of the cost. The Work programme is getting more people into work than the flexible new deal programme.

[Chris Bryant (Rhondda) (Lab)]

rose—

[Mr Duncan Smith]

No, I will not give way to the hon. Gentleman. I think he has a few apologies to make before I give way.

This was Labour’s legacy in government: 5 million on out-of-work benefits, one in five households with nobody working and 2 million children living in workless families—a higher proportion than in any other EU country. In opposition, they have learned nothing. Today’s amendment shows—if Members can be bothered to get to the end of it without falling asleep—that Labour would spend more, tax more and borrow more and let the next generation pick up the bill. The Bill is about picking up the pieces, sorting out the deficit and being a responsible Government.

14:44

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I beg to move,

That this House declines to give a Second Reading to the Welfare Benefits Uprating Bill because it fails to address the reasons why the cost of benefits is exceeding the Government’s plans; notes that the Resolution Foundation has calculated that 68 per cent of households affected by these measures are in work and that figures from the Institute for Fiscal Studies show that all the measures announced in the Autumn Statement, including those in the Bill, will mean a single-earner family with children on average will be £534 worse off by 2015; further notes that the Bill does not include anything to remedy the deficiencies in the Government’s work programme or the slipped timetable for universal credit; believes that a comprehensive plan to reduce the benefits bill must include measures to create economic growth and help the 129,400 adults over the age of 25 out of work for 24 months or more, but that the Bill does not do so; further believes that the Bill should introduce a compulsory jobs guarantee, which would give long-term unemployed adults a job they would have to take up or lose benefits, funded by limiting tax relief on pension contributions for people earning over £150,000 to 20 per cent; and further believes that the proposals in the Bill are unfair when the additional rate of income tax is being reduced, which will result in those earning over a million pounds per year receiving an average tax cut of over £100,000 a year.

It is good to see the Secretary of State fronting the Bill today and to see the Economic Secretary to the Treasury in his place. Where, however, is the Chancellor? It is a disgrace that he is not here in person. Where is he?

[Mr Duncan Smith]

The Chancellor told me earlier he was in Berlin making a speech—a long-term commitment —but he will be back in plenty of time for the winding-up speeches, and he is looking forward to hearing Labour make as much of a mess of it at the end as at the beginning.

[Mr Byrne]

I think it is surprising that the Chancellor is talking to people in Germany, rather than to MPs in the House about the disastrous consequences of his policies.

We know that the Chancellor and the Secretary of State do not see eye to eye on much, but they are jointly and severally liable for the mess and the haemorrhaging of the welfare budget that the Bill seeks to staunch. The Chancellor’s disappearance is a hallmark of the contempt that has been shown for the House today. The impact assessment for the Bill was published at noon. It makes radically different assumptions from the policy costings set out by the Chancellor last year. And now the Government propose to ram the Bill through the House in just one day of debate. They are terrified of scrutiny and exposure. It is turning into a hit and run on working families, and frankly we should not stand for it.

The Chancellor should have shown up, because the Bill is about clearing up the consequences of his failure. His reputation as a maker of recessions is now pretty well established. Every time he has come to the House, he has been forced to downgrade growth yet again, and since he took office he has battered the life out of the recovery that Labour left him in 2010. He is the first Chancellor for 35 years to preside over a double-dip recession. History will not judge him well.

But the Chancellor has a partner in crime: the Secretary of State, the man who has become the Comical Ali of the Government, the only man in the DWP who thinks that everything is fine and hunky-dory—a man who would put Dr Pangloss to shame. Every time he comes to the House, he comes with words of reassurance: everything on his watch is going according to plan. He blithely assures us that the Work programme is fine. We are told that universal credit is completely and utterly on track—not a hiccup to be heard—and that the benefit cap will definitely start in May. The only problem is that he is living in a fantasy land of his own, because everything is not okay, everything is not on time and everything is certainly not on budget. We were promised a Work programme bigger than any yet known to man. So big it could be seen from space. This is a programme that is so effective it is literally worse than doing nothing. It works so well that just three out of 100 people who passed through it passed into sustained jobs. It is a disaster.

Then, of course, we have universal credit—a policy that is now proceeding so smoothly that, it is fair to say, it has earned widespread support and praise from right the way across Government. Members of the Cabinet—perhaps even those sharing a building with the Economic Secretary—are now so impressed that they are telling anyone who will listen at the Daily Mail and elsewhere that it is a “disaster waiting to happen” and that the IT is “nowhere near ready.” The Secretary of State has so much grip on this project that the Prime Minister himself invited him to pack his bags and clear on out of the Department—a vote of confidence that I know rang around Caxton house, because senior officials are now leaving the Department as fast as they can.

Now, of course, we have the news that the benefit cap—which Lord Freud told the other place would absolutely, definitely, without question be introduced nationwide in April—will be introduced in just four London boroughs. This is a record of chaos, delay and impending disaster, and today the Government are inviting millions of working families in this country to pay to clean it up.

[Jake Berry]

I thank the right hon. Gentleman for giving way. I am sorry to drag him back to the Bill, but what would he say to the police officer in my constituency—the right hon. Gentleman heard my earlier intervention—who said, “Is it fair that people out of work have seen their benefits go up by 5.2% when my salary’s been frozen and I risk my life every day to keep people safe in this country?”? That is what this Bill is about; will the right hon. Gentleman please answer that question?

[Mr Byrne]

I want incomes to rise faster than benefits. That is why I think it was wrong that the hon. Gentleman voted for a three-year freeze in tax credits, which has hit 7,700 of his constituents. He must answer to them after today’s debate. Why is he supporting a huge tax cut for millionaires when 7,500 people in his constituency are seeing a freeze on their tax credits and a squeeze on them in the years to come?

[Grahame M. Morris (Easington) (Lab)]

To respond to the issues raised by Government Members, I point out that a lady on £72 a week in jobseeker’s allowance came to my surgery on Friday. She is being expected to pay £9.60 because of a loss of housing benefit because of the imposition of the bedroom tax. What do Government Members have to say to her?

[Mr Byrne]

Once upon a time—back in 2004 and 2005—when the Secretary of State was making speeches about poverty, he said that the way to judge the Conservative party was on how its policies worked for the poorest communities in the country. What many people will be asking after today’s debate is: what happened to that man?

[Jane Ellison (Battersea) (Con)]

The right hon. Gentleman is perhaps not willing to address the issues put to him by Government Members, but I wonder whether he will address the question raised by a former Cabinet colleague of his, Jacqui Smith, who said earlier this week that Labour canvassers

“who’ve knocked on doors recently”

have

“been told the problem for Labour is…they think we caused the deficit and they’re not…convinced we know how we’ll solve it.”

How would he respond to her?

[Mr Byrne]

I spoke to the former right honourable Member for Redditch yesterday and I set out—[Interruption.] Absolutely. I set out the substance of today’s debate and said that we have a choice between the Tory way and the Labour way to bring down welfare spending. The Tory way is to hit working families; the Labour way is to help people work.

[Andy Sawford (Corby) (Lab/Co-op)]

I share the concern about the Bill’s impact on public service workers. Has my right hon. Friend seen—I am sure he has—the research published over the weekend by the Children’s Society? It shows that 40,000 soldiers will see their household incomes cut if the Bill goes through, along with 300,000 nurses, 150,000 primary school teachers and 9,300 of my constituents, which is why I will be voting against it today.

[Mr Byrne]

My hon. Friend is already speaking very eloquently in the House. Some 40,000 soldiers, 300,000 nurses and 150,000 primary and nursery school teachers will be hit by this Bill. I suggest to the House that they are making a much bigger contribution to the health and well-being of this country than the Chancellor of the Exchequer, who is accusing them of being the people whose blinds are closed in the morning.

[Alex Cunningham (Stockton North) (Lab)]

We have seen the failure of the Work programme. In my constituency, unemployment is now 10% higher than a year ago. One person in the area telephoned BBC Tees this morning and said that he had £130 a week for himself, his wife and three children. He cannot get a job and all he has to look forward to is an increase of £1.30—enough to buy a loaf of bread. Does my right hon. Friend agree that we need to show compassion to such families, rather than giving millionaire earners a tax break of £2,000 a week?

[Mr Byrne]

What we need from this Government is the right combination of compassion and competence, and right now we see neither.

[Mrs Madeleine Moon (Bridgend) (Lab)]

We were told that this Bill was about fairness. How can it be a fair when a young mother in my constituency on jobseeker’s allowance is expected to live on £56.24 a week? She will lose £12 a week through the empty room tax and £9 a week in council tax. That leaves her with £35 a week to pay for heating, water and food. How is she going to survive? How can that be fair?

[Mr Byrne]

My hon. Friend is exactly right. What her constituents need is a job, but what they are not getting from the failed Work programme is any prospect at all of work.

[John Healey (Wentworth and Dearne) (Lab)]

On inflation uprating, which is at the heart of this Bill, there is a widespread belief that housing benefit for private rented accommodation will rise in April by CPI. The Department has done little to dispel that understanding, but in Rotherham, as my right hon. Friend might be aware, the rate for a three-bedroom home is set to be cut by 3% in cash terms. Is not this, like the Bill, another harsh, half-hidden cut to the help that those in work and those out of work need to meet the cost of household bills?

[Mr Byrne]

My right hon. Friend is absolutely right. He is also right that the Department’s incompetence in proceeding with some of these reforms means that many of the changes risk costing more than they save. That is why Ministers have been forced to delay implementation of the benefit cap, about which they made such a fuss last year. Now we see that it will be implemented in just four London boroughs, because the Government do not know how it will work in practice.

[Charlie Elphicke]

Does the right hon. Gentleman think it right and fair that benefits should have gone up by 20% at the same time that average earnings have gone up just by 10%?

[Mr Byrne]

I repeat: there are 6,800 people in the hon. Gentleman’s constituency on tax credits—we have rehearsed these figures before, because he is an assiduous attender of social security debates. I want incomes to go up faster than benefits. That is why it is so important that tax credits are protected. He has to accept that he has voted for a freeze in tax credits for the 6,800 of his constituents who enjoy them. Today he is proposing to vote for a further squeeze, at a time when millionaires are being given a tax cut. I just do not understand how he will justify that to the good residents of Dover.

[Nick de Bois (Enfield North) (Con)]

The right hon. Gentleman refers to 6,700 people in the constituency of my hon. Friend the Member for Dover (Charlie Elphicke). While he is bandying statistics around, he might be interested to know that there are 38,000 people in work who have benefited from the increase in the tax threshold. The way to raise incomes is not to have inflation of state support but to get people back into work where they can keep more of their own income.

[Mr Byrne]

The hon. Gentleman knows as well as I do—he is a numerate man and he understands the figures involved in this debate—that the personal allowance does not compensate for the whack that has been delivered to most working families in this country. The House of Commons Library says they will be £280 a year poorer by next year and the Institute for Fiscal Studies says they will be £534 poorer by 2015-16. He has to get real about the impact of his Government’s policies, because they are hurting 7,000 of his constituents.

[Nick de Bois]

I am grateful to the right hon. Gentleman for giving way again. However difficult these decisions are, if we look more closely at the numbers, we see that he is not highlighting the fact that people earning £50,000 or £60,000—which most people would consider a good income—are included in his figures for tax credits. That is disingenuous and merely a reflection of the trap and the legacy of the shadow Chancellor’s former friend, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).

[Mr Byrne]

That is complete nonsense. This Government are taking £14 billion out of tax credits and the Bill proposes to take another £4 billion. That will hurt 7,000 of the hon. Gentleman’s constituents, at a time when millionaires are being given a tax cut. I simply do not understand how he can justify that, either in this House or on the streets of Enfield.

[Several hon. Members]

rose—

[Mr Byrne]

I am going to make a tiny bit of progress once I have given way to my hon. Friend the Member for Wrexham (Ian Lucas).

[Ian Lucas (Wrexham) (Lab)]

I am grateful to my right hon. Friend. What Government Members do not seem to understand is that the whole rationale for this Bill is the need to address their failure to deliver on the economic promises they made when they first came into government. The Bill is necessary only because the Government have failed economically.

[Mr Byrne]

My hon. Friend is absolutely right. When the Chancellor came to the House back in December, he was forced to admit that somehow, for some reason, growth had eluded him once again—it had got away. He brought forward a package of measures that was so focused on generating jobs that the Office for Budget Responsibility looked at it and revised the claimant count for the forecast period, not down but up by 300,000. The OBR also spelled out how much this was going to cost us: it is an eye-watering figure. The heroic efforts of the Chancellor and the Secretary of State to get the claimant count down over the next few years is costing us £6 billion in higher welfare bills, and today’s Bill shows us exactly who is going to pick up the tab.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

rose—

[Margot James (Stourbridge) (Con)]

rose—

[Mr Byrne]

I shall give way to people who were here at the start of the debate, rather than to those who have wandered in late. This is an important debate. The point that I want to make, before I give way to the hon. Member for Stourbridge (Margot James), is that we are learning today who is being asked to pick up the bill for this catastrophic economic failure. It is not Britain’s richest citizens, who are now so hard pressed and under the cosh that they are being given a tax cut. From next year, millionaires will have £107,000 more to help them to heat their swimming pools. It is not Britain’s millionaires who are picking up the tab; it is Britain’s working families. The measures in the Bill are a strivers’ tax, pure and simple.

[Margot James]

Is the right hon. Gentleman going to acknowledge the 1 million extra jobs that have been created since 2010? Will he also acknowledge that the number of people claiming tax credits escalated to an unsustainable level under his Government? The country cannot afford to have 50% of the population either claiming tax credits or in receipt of benefits. That is unsustainable.

[Mr Byrne]

I look forward to coming to Stourbridge and helping to explain to the 6,500 people there who are on tax credits that their Member of Parliament thinks that the money they are getting is unsustainable. I happen to think that those 6,500 people, whom the hon. Lady has just dismissed, need every pound of the tax credits that Labour delivered when we were in office.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I should like to bring the right hon. Gentleman back to the Bill, and to tell him that when he votes against it tonight, £1.9 billion a year will go missing. Will he compare that £1.9 billion a year with the £3 billion a week that Labour was borrowing during its last year in office?

[Mr Byrne]

I would contrast that money with the £3 billion a year that the Chancellor is giving away to Britain’s richest citizens, in a tax cut that will kick in next year, at a time when the Government are cutting tax credits and when Britain’s working families are under pressure. How can the hon. Gentleman possibly justify that, either here or to his constituents?

[Mr Duncan Smith]

I would be grateful if the right hon. Gentleman will now acknowledge that all the OBR’s latest figures show that, under this Government, the wealthiest are paying more in tax than in any single year under his Government.

[Mr Byrne]

Like me, the Secretary of State will no doubt have seen table 2.1 of the Budget, published in March 2012, which clearly shows that in 2014-15, the cost of the tax giveaway will be £3.4 billion. How can he possibly justify that at a time when he is hitting Britain’s working families? Will he justify it now?

[Mr Duncan Smith]

I asked the right hon. Gentleman a simple question—[Interruption.] Actually, the shadow Chancellor should leave the right hon. Gentleman alone for a second; I think he has a brain in his head. Don’t listen to him; his advice to the last Prime Minister was hopeless. I want to ask the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) a simple question. Here are the figures: the wealthiest in Britain are paying more in tax under this Government than in any single year under the last Government. Does he agree with that?

[Mr Byrne]

We put the top rate of tax up. It is this Government who are cutting it, at a cost of £3.4 billion a year. How can the Secretary of State possibly justify the choices made by his right hon. Friend the Chancellor, a man who has supported him hilt and sword? How can the Secretary of State justify giving away £3.4 billion to Britain’s richest citizens in a tax giveaway when he is hurting Britain’s working families? Justify it now!

[Mr Duncan Smith]

Does the right hon. Gentleman agree or disagree that the OBR figures show that, under this Government, we are raising more in tax from wealthy people than in any single year under the last Government? Will he now admit that?

[Mr Byrne]

I am saying that we should be raising more from Britain’s richest citizens, not giving them a £3.4 billion tax cut to heat their swimming pools while Britain’s working families are being punished. Let us be clear about the effects of the Bill.

[Nadhim Zahawi]

rose—

[Mr Byrne]

I will give way to the hon. Gentleman, even though he could not be bothered to get here for the beginning of the debate, but let me first ask him how he can justify giving away £3.4 billion to Britain’s richest citizens while taking money away from Britain’s working families. Justify that now!

[Nadhim Zahawi]

My question to the right hon. Gentleman is about the honesty with which he delivered his message in 2010, in which he told us that there was no money left and wished us good luck. Will he show the same honesty now and acknowledge that we are taking more from the wealthiest in this country in every year of this Parliament than was taken in the 13 years of the Labour Government? That is the honesty we require from him. Yes or no, please?

[Mr Byrne]

I think that, at a time like this, those with the broadest shoulders should be carrying the biggest load. I also thought that, once upon a time, the Conservatives agreed with that principle. I seem to remember hearing that once in a debate.

[Dr Sarah Wollaston (Totnes) (Con)]

rose—

[Mr Byrne]

I will give way to the hon. Lady, who I believe made an important intervention yesterday about the tone of this debate and about how we should not reduce it to a basic division between Britain’s shirkers and strivers. I hope that she will say more about that today.

[Dr Wollaston]

I certainly feel that the tone of this debate is important, and that we should not be talking about shirkers. I do not believe that people on welfare benefits are shirkers. Having made that clear statement, I would like to ask the right hon. Gentleman this question: for how many days did the Labour Government apply the top rate of tax when they were in office?

[Mr Byrne]

I know that the hon. Lady is new to the House—[Interruption.] I will seek to answer her question as soon as those on her own Front Bench calm down a little. I think that she would acknowledge that the economics and the politics of this Parliament are very different from those in the last three Parliaments. There was an important principle at the heart of the debate—namely, that those with the broadest shoulders should bear the biggest load. That is why, when Labour was in power, we put up the top rate of tax. We knew that, as part of the plan to bring the deficit down, those with the broadest shoulders should bear the biggest load. That is why we put up the top rate of tax, and that is why we object to the Chancellor of the Exchequer cutting it and giving £3.4 billion to Britain’s richest citizens when he is taking money from Britain’s working families.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

The hon. Member for Totnes (Dr Wollaston) was right yesterday, and she is right today. This debate should not polarise people in work against people who are out of work. However, the right hon. Gentleman must realise that those of us who lived through the last Labour Government saw the rich doing better, the bonuses getting higher, the bankers exploiting people more and the pensioners not getting the link with earnings that Labour promised but never delivered. This is a difficult decision, but the Government have got the balance right in these difficult times. I hope that, by the end of this Parliament, they will be vindicated through many more people being in work and many fewer being on benefits.

[Mr Byrne]

I respect the passion with which the right hon. Gentleman made that intervention, but would he mind intervening once again and telling me whether he thinks a top-rate tax cut is the right priority for Britain’s hard-pressed working families?

[Simon Hughes]

No, I do not think that it is the right priority, but it was part of a package deal that will leave the richest paying more than they did under Labour, that will bring the top rate down to 45% when it was only 40% in 12.5 years of the Labour Government, and that will bring in a rise in the tax threshold to £9,440 for ordinary people in my constituency and the right hon. Gentleman’s this year. In this place, we make balanced choices. This is a reasonable balanced choice to get the economy out of the mess that he and his colleagues have clearly admitted they left us in.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Interventions, even when invited, need to be relatively brief.

[Mr Byrne]

At least the right hon. Gentleman is honest, unlike that lot on the Conservative Benches. We will leave it to the voters of Bermondsey to decide whether the package that he secured, which punishes so many hard-working families in his constituency, was or was not a good one.

[Several hon. Members]

rose—

[Mr Byrne]

I shall give way to my hon. Friend the Member for Eltham (Clive Efford), but then I will make some progress.

[Clive Efford (Eltham) (Lab)]

The argument coming from the Government Benches is wholly founded on misinformation, particularly in respect of the claim that the Government have created 1 million jobs in the private sector. Is my right hon. Friend aware that, according to the Office for National Statistics, 196,000 of those jobs are due solely to the reclassification of sixth-form colleges and further education colleges?

[Mr Byrne]

My hon. Friend is right: sometimes things are not all that they seem to be.

[Several hon. Members]

rose—

[Mr Byrne]

I will give way later, but I want to move the debate on a little. It is time that we debated who is going to be hurt by the Bill. Yesterday, the Institute for Fiscal Studies did us a great favour in setting out for the first time that a total of 7 million working families will be hit by the Bill—half the working families in Britain. As we heard from the hon. Member for Enfield North (Nick de Bois), some on the Treasury Bench like to cry, “Don’t worry, don’t panic; working people are going to be compensated by the rises in the personal allowance.” That is simply not true. The IFS is very clear about that: the real income of a one-earner working family is going to be £534 a year less by 2015-16.

The Children’s Society, as one of my hon. Friends mentioned earlier, has spelt out clearly what this means for many of Britain’s working families. A second lieutenant will lose £552 a year, and there are 40,000 soldiers in the same position; and a lone parent nurse will lose £424 a year, as will a primary school teacher. These are not people who have their blinds closed in the morning, yet these are the people who will be hurt by the Bill.

I know the Chancellor thought he was being clever. I know that he was, as the hon. Member for Brent Central (Sarah Teather) said, playing the politics of the playground and looking for a dividing line. We are right to ask what that means for the average Conservative constituency. It means that an average of 6,000 families in Tory-held constituencies will be worse off—a number that I noticed was bigger than the Tory majority in 107 seats. I just mention that in passing. Why should a second lieutenant, a nurse or a primary school teacher, or 6,000 residents of an average Tory constituency, be asked to pay for this Government’s failure to get people back to work? This is a strivers’ tax pure and simple: it does nothing to create new jobs or remedy the deficiencies of the Work programme; it does nothing to sort out the chaos in universal credit; it does nothing but punish working families that are now losing £9 billion of support under this Government.

[Chris Bryant]

Is there not another real problem? In many constituencies where there is profound deprivation and low-income families have even less money coming in to spend every week, we will see further depression in the local economy, more shops closed and fewer people in jobs, so that we will never be able to refloat the economy. Is not the greatest scandal of all the fact that working people in our constituencies—people in jobs—are using food banks to feed their children?

[Mr Byrne]

My hon. Friend speaks eloquently, and his remarks cut to the quick of the values now on show in this Government. Once upon a time—the Secretary of State will well remember this—he said:

“Conservative policies have to work for Britain’s poorest communities and every policy must be measured by that standard.”

That is what the right hon. Gentleman said on 28 June 2004, so let us weigh up the impact of this Bill on Britain’s communities. It will mean child benefit rising by 20p a week, maternity allowance by £1.37 and jobseeker’s allowance by 72p, while the income of a millionaire will go up as a result of the tax cut by £2,058 a week. How can he possibly justify that? He cannot. He knows that the Chancellor was in search of a dividing line on welfare and that he has obliged the Secretary of State to kiss goodbye to 10 years of campaigning to turn the Tory party into one that gave a monkey’s about poverty.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Does my right hon. Friend agree that child poverty in London remains stubbornly high, and that this Bill will make matters worse? My constituency has the highest level of child poverty, and this Bill will lead to more poverty across cities such as London and around the country.

[Mr Byrne]

Many unemployed people in my hon. Friend’s constituency are young people. These are the people who need a jobs guarantee backed by a tax on bankers’ bonuses.

[Andrew George]

Of course we welcome the Labour party’s last-minute pre-election conversion to increasing tax for wealthy people. The right hon. Gentleman will have heard in my intervention on my right hon. Friend the Secretary of State my sincere misgivings and my wish to encourage him to review this rather arbitrary 1% cap and perhaps to find ways of relating it to average wages. Bearing in mind that the welfare budget is—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. It was only a few moments ago, I remind the hon. Gentleman, when I said interventions on a speech needed to be brief and should not become a speech in their own right.

[Mr Byrne]

I am grateful for the intervention because I think the hon. Gentleman, like us, is concerned that in our country today a food bank is opening every three days, and that 5 million people may resort to payday loans this year in order to balance the books for the end of the month. The Sun on Sunday this weekend, in an article carried next to the one by the Secretary of State, said that a quarter of mums are now turning off heating so that they have enough money to feed the kids. Is that the kind of country that we are becoming, because the Saint of Easterhouse has now become the punch bag of the Treasury? Once he talked about broken Britain; now he is presiding over breadline Britain because he keeps losing his battles with the Treasury.

[Andrew George]

In view of that and given that the welfare budget is £220 billion, does the right hon. Gentleman believe that it is something that needs a long hard look at? Particularly in a time of austerity, where does he believe the savings can be made within that budget?

[Mr Byrne]

I have been very clear about where I think the savings can be made. I just think it is wrong that we are giving £3 billion in a tax giveaway to Britain’s richest citizens.

[Several hon. Members]

rose—

[Mr Byrne]

Let me deal first with the hon. Gentleman’s intervention. I think it is wrong that millionaires will get an extra £2,058 a week next year, in 2013-14, when child benefit is going up by 20p a week. I simply cannot see how that can be justified and I do not think that tax cut should go through.

[Several hon. Members]

rose—

[Mr Byrne]

I shall give way a couple more times, but then I want to conclude.

[Richard Fuller (Bedford) (Con)]

The right hon. Gentleman is right to say that the public do not want false distinctions between strivers and shirkers and he is equally right, I think, to believe that people will see through those who pretend to care when they do not have the money to show that they care. In his more lucid moment, he explained that the Government had no more money left, so would he accept that one answer might be to push forward with ideas such as the living wage, and will he advise us, on the basis of his own research on a living wage, what impact it would have on the long-term benefits needs in the country?

[Mr Byrne]

I suspect the hon. Gentleman feels that very keenly, as 7,500 people in his constituency are on tax credits. I think that the best way to bring the welfare bill down is by getting people into work. The tragedy with the Bill is that it fails the Ronseal test set out by the Prime Minister yesterday. It does not do what it says on the tin. We are told that this Bill is all about reducing welfare spending. Actually, if we put tax credits to one side, the welfare bill for the period covered by this Bill will not rise by 1%; it is going to go up by 4%. It will go up by £8 billion because the Secretary of State is doing so little to get people back to work.

The reality of the debate is that there is a Labour way to bring down welfare spending and there is a Tory way. The Tory way, aided and abetted by the Liberal Democrats, is to attack tax credits. The Labour way is to bring down welfare spending by getting people into jobs—jobs in which they will pay tax rather than sitting on the dole taking benefits. That is why we tabled our amendment. We think that it is right to introduce a bank bonus tax to get 100,000 young people back to work, and to reform pension tax relief to create a two-year limit on jobseeker’s allowance. We think that it is right to send the clear signal that anyone who can work must not, and will not, be allowed to languish or to live a life on welfare. That is the kind of tough-minded but fair policy that we now need.

[Ms Karen Buck (Westminster North) (Lab)]

We have heard many interventions from Government Members about the unsustainability of tax credits and top-up benefits for working families. According to the Government’s own impact assessment,

“households towards the bottom of the income distribution are more likely to be affected and have a slightly higher average change because they are more likely to receive the affected benefits.”

What does my right hon. Friend think is the reason for that statement?

[Mr Byrne]

I note that the impact assessment is based on assumptions very different from those that formed the basis of the Treasury costings in December last year. However, the Government cannot change the simple truth: this is a strivers’ tax pure and simple, and it will hit people on tax credits.

We oppose this strivers’ tax. We believe that welfare to work will not work without jobs, and the Bill does not create a single job. It creates a heck of a mess, and asks Britain’s working families to clear it up. I urge the House to oppose the Bill’s Second Reading, to strike a blow for Britain’s strivers, to send the Government back to the drawing board, and to demand from them a proper plan to get our country back to work.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I remind all Members that there is a five-minute time limit on Back-Bench speeches.

15:21

[Gavin Williamson (South Staffordshire) (Con)]

Thank you for the opportunity to contribute to the debate, Madam Deputy Speaker.

If they read Hansard tomorrow, many of my constituents will be under the misapprehension that the last Labour Government were a great welfare-reforming Government, but one of the points that many others will make to me is that that left the legacy of welfare dependency that has corroded so much of our society. The simple reality is that the last Labour Government should have dealt with the issue of welfare reform when they had the opportunity to do so, between 1997 and 2010.

[Lisa Nandy (Wigan) (Lab)]

Research carried out recently by the Joseph Rowntree Foundation found that no such culture of worklessness existed, and that in fact there was a strong commitment to work among people throughout the country, including the 3,500 unemployed people in my constituency.

[Gavin Williamson]

Where we have a culture in which it sometimes does not pay to take a job or to work more hours, we capture people in a culture of dependency.

How do we measure success? Is it about spending more and more money? Is it about spending money on welfare, constantly and consistently, or is it about results? I think that we on this side of the House believe that it is about results. In 1997, the number of households in which no one had ever worked was 184,000. That number was far too high. Given all the billions of pounds that were spent, we would expect it to have fallen considerably: perhaps by 10,000, perhaps by 50,000, perhaps by 100,000. So what happened? Did it increase or did it fall? It increased, and not by 10,000—

[Chris Williamson (Derby North) (Lab)]

rose—

[Gavin Williamson]

Does the hon. Gentleman think that the number increased, or does he think that it fell? Perhaps he will tell the House.

[Chris Williamson]

If the hon. Gentleman is concerned about an increase in long-term unemployment, why will he not go through the Lobby with the Opposition in support of our amendment, which will guarantee jobs to people who are out of work for more than 24 months?

[Gavin Williamson]

The hon. Gentleman is living in cloud cuckoo land. He will not answer the question that I asked. How many more families are there in which no one has ever worked? In fact, the number increased from 184,000 to 352,000 under the last Labour Government. Is that a legacy to be proud of? I think that Members on this side of the House would say that it is not.

[Margot James]

My hon. Friend is making an excellent point about the legacy of the last Government. Perhaps he agrees with the economics editor of The Sunday Times, who wrote last week:

“It is hard to think of a period more conducive to control of welfare spending than the Blair years, 1997-2007.”

[Gavin Williamson]

That too was an excellent point. What we have seen is total fiscal irresponsibility. The whole idea of the Labour party’s proposals is to trap more people in welfare, not to take them out of welfare.

[Nadhim Zahawi]

My hon. Friend has made a very good point about Labour’s past record of fiscal irresponsibility, but what about its current record? Labour Members will vote for millionaires to receive child benefit.

[Gavin Williamson]

I am afraid that the Labour party’s proposals on so many matters are completely inconsistent. The greatest shame is that there are no ideas coming from Labour Members. They have no ideas about how to deal with the legacy that they left, in relation to welfare reform or in relation to the many billions of pounds of debts with which they have saddled the country.

[Fiona O’Donnell (East Lothian) (Lab)]

rose—

[Gavin Williamson]

I will happily give way to the hon. Lady if she explains to the House what she will cut. I assume that she will be voting for the amendment. Will she shut schools in her constituency? Will she close hospitals? Will she sack teachers? Will she get rid of nurses? I want to hear what the hon. Lady is going to do.

[Fiona O’Donnell]

What I want to do is return the hon. Gentleman to the subject of the Bill. Does he agree with Disability Rights UK, which has said that 1 million disabled people will be affected by the 1% uprating, and that more disabled people will be living in poverty? Is he proud of that?

[Gavin Williamson]

I am taking a lead from the Labour Front Benchers and touching on some of the reasons why we are in this position, and having to make highly difficult decisions. We are not scared to take difficult decisions, but perhaps if the Labour party had made some of the tough choices that we have made—if it had reformed welfare earlier, and had not trapped so many people in welfare dependency—the decisions that the present Government are having to make would be far, far easier.

I am afraid that the hon. Lady is not facing up to the reality, and nor is her party doing so. This Government are committed to giving a hand up, not a handout. What we want to see is people getting into work. What we want to see is people doing well, and not constantly depending on the state.

[Meg Munn (Sheffield, Heeley) (Lab/Co-op)]

rose—

[Gavin Williamson]

I will make some more progress.

That is what we are hoping to do. That is what we are doing for our welfare reform, and that is what we are doing here today. We recognise that we cannot spend money that we do not have. It is a simple fact and we hope that eventually the Opposition will adopt such fiscal responsibility. We hope that during the afternoon they will suggest what they would cut if they vote in favour of their amendment.

No one wants to see a restriction on benefit increases, but we all have to face the reality of the country’s position. The coalition is dealing with that reality and with the mess that the Opposition left us. That is what we are getting on with and what we will deliver for this country.

15:29

[Ms Karen Buck (Westminster North) (Lab)]

Over the past hour and a half, the parties on the Government Benches have thrown various lines of argument into the mix, but possibly the most absurd is that the whole agenda and the Bill are about deficit reduction. That argument is already in tatters. We have seen the economic recovery deferred and a double-dip recession possibly turning into a triple-dip recession. The rate of reduction of unemployment has been so slow since 2010 that it will not return to pre-recession levels until 2019, and we have seen a systematic and structural increase in under-employment. It is no wonder that total expenditure on welfare, despite the protestations, has been going up.

Let us take one example about which there has been a great deal of sound and fury over recent years—the housing benefit bill. Over this comprehensive spending review period, this Government will spend £12 billion more on subsidising private tenants than was spent by the Labour Government during the previous CSR period, so let us not hear anything from the Government about their successes on welfare reform and reduction and our failure.

For the first time in decades we see more working than workless people in poverty—now a record 6.1 million. It is no wonder that the new head of the Secretary of State’s favourite think-tank, the Commission for Social Justice, told an interviewer:

“I would say we have missed in-work poverty”.

Yes, the commission did, and yes, the Government did, but rather than the Government facing the evidence, we have been subjected to a barrage of rhetoric about the people behind the closed curtains and the shirkers rather than the strivers.

[Meg Munn]

Does my hon. Friend recognise that in half the workless households the adults are under 25, which is a reflection of the growth in unemployment among that age group?

[Ms Buck]

That is correct; I recognise that figure. We have seen from the Bill and the debate behind it a political debate and a set of wheezes that the Government think will pay off for them. The problem with wheezes is that they tend to fracture when they come into contact with reality. The Government cannot make serious money out of an assault on out-of-work benefits, whatever the Conservatives like to say. Just 3% of all welfare spending goes on jobseeker’s allowance. Indeed, all out-of-work benefits account for only 3% of GDP between them. The House of Commons Library advises me that if only out-of-work benefits were subject to the 1% cap, but in-work benefits were uprated as normal, 80% of the proposed savings would disappear. If one factors in the changes to the personal tax allowance, one finds that working people, as the Resolution Foundation demonstrated to us, take 60% of the hit.

If the Bill is passed, 2.5 million workless households will lose out by about £215 a year by 2016, and of the 14.1 million working-age households with someone in work, 7 million will be hit: 30% of all households will take a hit on their income because of this Government’s obsession with the tiny minority of long-term or multigenerational workless.

The distinction between those in and out of work is far less rigid than the Government would have us believe. That is an extraordinary piece of rhetoric, given that the universal credit, the centrepiece of the Government’s welfare agenda, is designed to blur the distinction still further, and it has that one significant advantage of seeking to do that. Millions of our constituents, in Conservative and Liberal Democrat constituencies as well as in Labour ones, churn between those states of being in and out of work. Last year there were between 244,000 and 357,000 new claims every month for jobseeker’s allowance, while between 242,000 and 370,000 left benefit every month.

It is a myth that the welfare reform agenda put forward by the Government is about tackling worklessness. It is an assault on low-income working families far more than on working households. It is an assault on both, and on very low-income families, but it is real and not mythical families who will be hurt as a consequence. It is real children who are at increasing risk of going to school hungry, as teachers unions are already reporting, and it is real children who will return to homes that cannot be heated by parents who cannot manage to balance all the bills.

We live in a country that apparently can afford tax cuts for millionaires but requires low-income, working families to go to food banks and pay their mortgages with payday loans. Every day in London 100 homes bust the £1 million value level, yet 70,000 children were homeless this Christmas. Today we should not be reducing the capacity of 9.5 million families and households across the country to pay their bills.

What the crash and its aftermath demonstrated beyond doubt was that the future cannot be like the past. We want everyone who can work to do so, we want that work to be secure and fairly paid and for the costs that consume an unsustainable element of people’s incomes to be reduced.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

Did my hon. Friend notice that the Secretary of State accused Labour of having a new idea with our job guarantee? In fact, the pamphlet produced by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) on a job guarantee is dated January 2012. We have been discussing these ideas for more than a year.

[Ms Buck]

We have indeed been discussing these ideas. The future jobs fund demonstrated value for money in getting people back into work, but the Conservative party, which claims to like evidence, trashed it in favour of the Work programme, which, as we know, has been less effective than doing absolutely nothing would have been.

Without jobs, deficit reduction is doomed, however much the Government cheese-pare away at the income of the poorest. While housing and child care costs consume an ever-larger portion of the incomes of poorer families, work cannot pay and families cannot thrive. It is jobs, fair pay, affordable homes and good affordable child care that will get us out of the trap we are in, whether it is the trap we want to spring to get people into work or the trap of deficit reduction. The trap that the Government are setting today will catch 30% of households in a worsening squeeze on their incomes at the very worst time for them to be facing it.

15:36

[Sarah Teather (Brent Central) (LD)]

People who come to my constituency office these days for help with some kind of error in their benefits often spend the first few minutes trying to justify their worth. They usually begin by trying to explain their history of working and that they have paid tax. They are desperate to get over the point that they are not like other benefit claimants—they are not a scrounger. It is perhaps a feature of the way in which the term “scroungers” has become so pervasive in social consciousness that even those on benefits do not attempt to debunk the entire category, only to excuse themselves from the label.

Language matters. Politicians in this place know that, because all of us spend a good deal of time worrying about how everything we say will be reported by the media, just as journalists pore over every fact, comma and noun we give to look for power shifts and personal divisions. Any modern political party devotes considerable money and effort to testing messages with focus groups to see how they would influence voting patters. However, I am afraid we often spend less time considering how our language actually affects people’s lives, choices, values and sense of worth, how they rub up against their neighbours and how society itself functions.

In an atmosphere of uncertainty and limited resources and where every family in this country is struggling, there is a natural tendency to try to find someone to blame for our woes. A fissure already exists between the working and non-working poor. Hammering on that fault line with the language of “shirkers” and “strivers” will have long-term impacts on public attitudes, on attitudes to one neighbour against another. It will make society less generous, less sympathetic, less able to co-operate. The marginalisation of the undeserving poor will place one group outwith society entirely over time and leave them less able to make choices about their lives and to participate. That fragmentation of society, for me, is the spectre of broken Britain, and it is one that we hasten at our peril.

[Gareth Johnson (Dartford) (Con)]

Does the hon. Lady not recognise that the nub of the whole argument is that if we allow benefits to be increased by more than salaries, that will increase the number of people on benefits who are trapped in poverty and unable to afford to go to work?

[Sarah Teather]

I will return to that point in a moment, because I want to make another point about public attitudes first.

For those of us in this place who care about social justice, long-term changes in public attitudes to poverty should give us other causes of concern, because they will make it more difficult for any politicians who come after us to argue for any option for the poor, because public opinion will simply not support it. The irony, of course, is that, as many have said, many of those affected by the Bill are actually in work; many are the same group who have already had a negligible pay rise and are already bumping along at the bottom of the poverty threshold. For me, that is the first of a number of disingenuous comparisons used to argue for the fairness of the Bill. The first is that those affected are out of work, when many more are in fact in work but on low pay. As the hon. Member for Westminster North (Ms Buck) mentioned a moment ago, many of those are part of the group of people who cycle in and out of work all the time; I see that in my constituency.

The second disingenuous point is about percentages themselves, which fail to take into account the cuts to housing benefit that families in my constituency will be experiencing in the next six months or so as the changes filter through. There are also the changes in April to council tax benefit; they will affect the same families affected by the uprating provisions in the Bill.

The third point is whether percentages mean anything at all. Whatever goal posts are used to measure the percentage change in benefit across time, it is clear that the monetary value of rising average wages is significantly more than that of benefits. Percentages do not buy milk, bread or school uniforms—pounds and pennies buy those things, and it is in pounds and pennies that people will experience a cut.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I thank the hon. Lady very much for giving way. I have sat for three or four minutes listening to her and I have never in my life agreed with her more. She is right about the language of the debate and about the percentages—it is monetary value that is important.

Can the hon. Lady explain to me in any way how the removal of the best part of £6 billion from the economy in the next two to three years will stimulate the economy? How many jobs will it create, if any at all?

[Sarah Teather]

The fourth disingenuous point is probably that cutting the incomes of those at the bottom of the income threshold will help boost the economy. All the evidence says that money put into the pockets of those at the bottom of the income spectrum is most likely to be spent. That is precisely why my party argued so hard during negotiations to ensure that we raised the threshold of tax on the lowest paid.

I do not enjoy voting against my own party, and I cannot vote for the Labour amendment, but with a very heavy heart I shall be voting against the Second Reading of the Bill. I hope that I, and any others who choose that course of action, will give the Government some cause for thought and reflection.

15:42

[David Miliband (South Shields) (Lab)]

It is a pleasure to follow the hon. Member for Brent Central (Sarah Teather).

The truth is that all western economies need to refashion their social contract to cope with demographic and economic change—expanding child care versus higher child benefit; housing benefit versus house building; and long-term care versus reliefs and benefits for old age. In each case, we need to choose.

The Bill asks us to make three judgments: about fairness, affordability and politics. The Chancellor claimed in his autumn statement that the Bill was about distinguishing working people from those

“asleep, living a life on benefits.”—[Official Report, 5 December 2012; Vol. 554, c. 877.]

That has been blown out of the water by the facts that have come out since; the facts unearthed by my right hon. Friend the shadow Secretary of State today are damning.

What of the 3,120 people in South Shields on income support or the 4,200 on jobseeker’s allowance alleged to be choosing a life of Riley? I have three points. Two years ago, the Prime Minister said that he had ended the option of a life on benefits through the so-called Welfare Reform Act 2010. Secondly, the Government’s own figures about the level of fraud show it to be 0.7%—by the way, it is lower among immigrants to this country. Thirdly, the DWP’s own figures, published by the Secretary of State, show that more than 10 jobseekers in South Shields are seeking every job. In all the talk of fairness, that is what is unfair.

[David T. C. Davies (Monmouth) (Con)]

Will the right hon. Gentleman elaborate on the statistic he gave? Do immigrants not have a lower level of benefit fraud because fewer of them are entitled to the full range of benefits?

[David Miliband]

I do not want to give the hon. Gentleman a maths lesson—I did not get good marks in maths—but percentages are percentages; that is the whole point. If we change the denominator it plays through in the percentage that comes later. I do not want to get too diverted by that, but I thank him for the extra 50 seconds.

Let me get on to the question of affordability, which is central to the Government’s case. The Government claim that the alternative to this Bill is higher borrowing or higher taxation, but I want to show why that is not true. The Government themselves have projected the total cost of all benefits, all tax credits and all tax relief for the next few years, and I am happy to debate priorities within that envelope. I will take the envelope that they have set, but let us have a proper debate about choices, not the total sum—a priorities debate, not an affordability debate.

[Nadhim Zahawi]

rose—

[David Miliband]

Just a minute.

The measures before us raise £3.7 billion from poor and lower-middle-income people in 2015-16. The Chancellor cut tax relief for pension contributions by wealthier people, but by how much? It was by £200 million in 2013-14 and £600 million in 2015-16. The cumulative saving from the richest between now and 2015-16 is £1.1 billion; the cumulative saving from those on lower-middle incomes on benefits and tax credits is £5.6 billion. Taking five times as much from poor and middle-income Britain as from the richest in Britain—

[Kwasi Kwarteng (Spelthorne) (Con)]

rose—

[David Miliband]

I will come to the hon. Gentleman in a minute.

Taking five times as much from lower and middle-income Britain as from the richest in Britain is not equality of sacrifice. The Chancellor reminds me of the man at the top of a ladder in a 1929 election poster. The man at the bottom of the ladder has got water up to his neck, and the man at the top shouts, “Equality of sacrifice—let’s all go down one rung!” It is not equality of sacrifice when you are up to your neck in water.

[Kwasi Kwarteng]

rose—

[David Miliband]

I will come to the hon. Gentleman in a moment.

The Government have made a great deal of the point that no one should receive more on benefits than the average wage of £26,000 a year, but they offer tax relief of £40,000 for those with £40,000 spare. Just to be clear, that tax relief costs £33 billion a year, while we are talking about a total bill of £42 billion for out-of-work benefits. If tax relief on pension contributions were limited to £26,000 a year, we would not need this Bill. That is the point about priorities and choices that need to be made.

[Kwasi Kwarteng]

The right hon. Gentleman gives a very powerful speech in which he mentions lots of facts and statistics, but there is a very fundamental question that he has not answered. Is it right that people on out-of-work benefits should be receiving faster and greater increases in their income than people on very low wages? Is that fair?

[David Miliband]

Forty thousand soldiers are not on out-of-work benefits but they are being hit by this Bill. Eighty per cent. of the savings—

[Kwasi Kwarteng]

Answer the question.

[David Miliband]

I will address it directly; I am very happy to do so. If a couple on £5,500 a year or someone on £3,700 a year gets a 1% increase, that is different from someone who is on £15,000, £20,000, £25,000, £30,000 or £35,000 getting the same increase, because although the people on £15,000, £25,000 or £30,000 are making tough choices, those on £5,000 or £3,700 are making a choice between feeding their kids and heating their home.

[Nadhim Zahawi]

rose—

[David Miliband]

Let me make some progress and I will come to the hon. Gentleman if I have time.

The truth is that this rancid Bill is not about affordability; it reeks of the politics of dividing lines that the current Government spent so much time denouncing when they were in opposition in the dog days of the Brown Administration. It says a lot that within two years they have had to resort to that dividing-line politics. We know the style: you invent your own enemy, you spin your campaign to a friendly newspaper editor, you “frame” the debate. But the enemy within in is not the unemployed; the enemy within is unemployment.

I do not want to live in a society where we pretend that we can enjoy the good life while our neighbours lose their life chances. It is bad enough to have no economic growth, or 420,000 young people out of work for more than six months, or rising levels of child poverty, or declining levels of social mobility, but it is hard to stomach a Government who take absolutely no responsibility for their mistakes. It is intolerable—[Interruption.] Government Members are laughing, but I am ready to say what we did wrong; I have not heard them say a word about what they are doing wrong. It is intolerable to blame the unemployed for their poverty and our deficit. That is why I will vote for the amendment and against this rotten Bill.

15:50

[David T. C. Davies (Monmouth) (Con)]

It is never a pleasure to support any Bill that will leave some people worse off, but Members of both Government parties do so out of a heavy sense of duty and responsibility, both to those who pay taxes and to those who receive them. It is unfortunate, to an extent, that this debate has been framed, perhaps not in this House today, but in some quarters of the press, as a kind of battle between workers and shirkers or, even more regrettably, between immigrants who have come to this country and are sponging off the state and those British nationals who have been here all their lives and paid taxes.

It is true that some people have come to this country and have received too generous an amount in benefits. It is equally true that a lot of eastern Europeans—I know that both points are true from the experience of my own extended family, who are eastern Europeans—have come to this country, sometimes speaking very little English and sometimes with qualifications that are not recognised here, and have managed to find work very quickly, have used that work to get better jobs, and have ended up contributing a great deal to our society. It is true that some British people have not wanted to take on the jobs that have been snapped up by eastern Europeans.

I would have no hesitation in saying to somebody who is fairly young and in their 20s that they should be willing to accept any job going, no matter how demeaning it may appear. I have worked in nightclubs and done other low-paid work in my life. I would have more of a problem, however, with saying to people I know who spent 20 or 25 years working for Tata—British Steel as was—who lost their job through no fault of their own and who may be a father of three or four, “You have to go to work in Starbucks on the minimum wage.” It is a shame that we find it hard in our benefit system to distinguish between different types of people, but that is the way it is.

We are not here to talk about penalising people; we are here because we have a simple problem, which was put eloquently by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) when he said that we do not have any money.

[Bill Esterson (Sefton Central) (Lab)]

If the hon. Gentleman is saying that that is the problem, why is he supporting a Government who are only too happy to give a tax cut of £2,000 a week to everybody earning more than £1 million a year? How does that add up? How is that fair?

[David T. C. Davies]

Put simply, the total amount of tax that we are taking from the rich has increased, as my right hon. Friend the Secretary of State has said, and that has not been denied by any Opposition Member. The total amount of money that we are taking from the rich has increased, which means that the total amount that we have to take from those who are not so rich has gone down somewhat. That is how I would justify it.

[Mrs Anne Main (St Albans) (Con)]

It might be worth reminding Opposition Members about the 10p tax fiasco that they imposed on some of the poorest members of my community. They have not been forgiven for it.

[David T. C. Davies]

I should also like Opposition Members to recognise the economic truism of the Laffer curve, which has proved that the more we try to tax the rich, the less we get off them. That is why so many people are queuing up to come over here from France at the moment, and good luck to them. We will have their money and spend it on less well-off people here.

I have listened carefully today to Opposition Members and I have not heard any of them explain how they would manage to maintain benefits at their current level or fund the increases that they want to impose. What would they cut in order to fill that gap? What extra taxes would they impose on people? Would they simply continue to do what Labour Governments have done since the time of Attlee, which is just to borrow the money they need in order to pay for projects that they cannot afford?

Opposition Members simply have no credibility left. Government Members are going to take a difficult decision, but with absolutely no pleasure whatsoever. We are doing so because what happened in 2008 was bad, but it was nothing compared with the financial catastrophe that would engulf us if we continued to spend £120 billion a year that we do not have.

Opposition Members and their many supporters outside in the unions and the pressure groups have complained about the bankers. I could complain about bankers as well. Why is it that these people want to put more money into the hands of the bankers by borrowing money from bankers, getting us more into debt and giving them greater amounts of interest? Who are the true friends of the bankers—the people who are trying to keep down their interest payments or the people who want us to be in hock to them?

I do not want to be a Member of Parliament who presides over Britain being turned into Greece, but without the sunshine. That is why I will vote for the Bill today.

15:55

[Ian Mearns (Gateshead) (Lab)]

As someone who has been in this House for two and a half years and who in the past has been unemployed and has held low-paid jobs, I think that the mirth with which parts of this debate are being greeted will be seen with dismay by many people outside this Chamber.

The Bill is yet another example of the Government demonising and punishing the most vulnerable in our society and making the poorest live in greater poverty. The most important fact to take into account is that the Bill does not target only those who are out of work, whom I refuse to refer to as skivers, but those who are in work on low wages. It does not affect just those in part-time work, but people who are in more than full-time employment—people who regularly work long hours or complicated combinations of part-time jobs just to make ends meet.

[Mr Kevan Jones (North Durham) (Lab)]

Does my hon. Friend agree that the problem is not just with the 1% cap? A constituent came to see me before Christmas who had been made redundant last year by a local factory. His wife is a cleaner and he has now taken employment in a local garage serving petrol at night. He will lose about £20 a week when the bedroom tax comes in because the family home of 30 years is now deemed to be under-occupied.

[Ian Mearns]

I could not agree more. My surgery in Gateshead is regularly populated by people with similar problems. This is a society that Government Members do not understand. In the whole town, the average income of a household is not much more than £20,000 a year. That is the income for the whole household, not for an individual.

[Stephen Mosley (City of Chester) (Con)]

Surely the way to help people on incomes of just above £20,000 is to reduce the amount of tax that they have to pay. What the hon. Gentleman is proposing is to tax them with one hand and give part of it back with the other. The way to solve the problem is to do what the coalition Government are doing and remove them from tax altogether.

[Ian Mearns]

What is shocking for low-income families is the impact of VAT on their real income. Rises in VAT and other taxes of that nature have a disproportionate impact on people on lower incomes.

[Mrs Moon]

Will my hon. Friend give way?

[Ian Mearns]

I am afraid that I will not, because I need to make progress.

The shocking statistic is that the number of people experiencing in-work poverty has risen to 1.6 million. Sadly, workers are increasingly reliant on welfare to top up their low wages. The number of families receiving tax credits has risen by 50% since 2003 and 4.4 million jobs pay less than £7 an hour. We have to ask ourselves whether we want to continue to support a situation in which private employers in particular do not want to pay a living wage to the staff that they employ in order to make profits.

As the Secretary of State knows all too well, a real-terms cut will have a much greater impact on low-income households than on higher-income households because basic living costs make up a greater proportion of their income. Even when a cut is proportional to income, it is often felt more acutely by a household on a lower income, as a greater proportion of its income is spent on essentials such as food, fuel and clothing.

On Friday, The Daily Telegraph reported the managing director of Waitrose as predicting that the prices of basic food such as bread and vegetables could rise by up to 5% this year, and in the past few months utility companies have hiked up their prices—the biggest change that I have seen so far is 10.8%. How on earth are the low paid and those out of work supposed to heat their homes and feed their families if their benefits are not increased in line with inflation? Families are already having to make difficult choices between heating and eating.

Make no mistake about it, the Bill is intended to squeeze further the already squeezed. Analysis by Unison shows that in-work poverty is becoming the modern face of UK hardship. It is estimated that the freeze suggested in the Bill will cost an average family with two children more than £1,000 by 2015-16. The Chancellor may point to changes in personal tax allowances as the reasoning behind the Bill, but that will do little to offset the shortfall in the income of working families. The Child Poverty Action Group argues that a working family eligible for both housing and council tax benefit will gain only 13p a week extra—13p!—as a result of the extended personal allowances. We should remember the furore that the 20p upgrade in old-age pensions caused under the last Government, and in this case we are talking about 13p. It is a slap in the face for the working poor and their children.

The CPAG has also spoken of its grave concern about the Bill, arguing that failure to

“uprate in line with inflation will increase absolute child poverty, relative child poverty and the material deprivation”

of many children. The Bill fails any fairness test with regard to income distribution, and it fails the working poor, the job seeking, the caring and the disabled poor. It will push those at the bottom further down the ladder.

The Bill is shrouded in smoke and mirrors. The Chancellor’s choice of start date to illustrate the rise of out-of-work benefits is 2007, but if we take a longer period, for instance beginning in 1979, we can see that benefits have risen significantly less than wages. He talks about strivers and skivers, but I see something different on the ground—families scraping by in low-paid work or jumping from insecure jobs to benefits and back again. The truth, unlike what the Government keep spouting, is that the vast majority of those who rely on benefits and tax credits are either in work, have worked or will desperately be trying to get into work in the near future. They have made a contribution to society, but their families are really struggling.

Welfare to work is a two-part equation: welfare and work. Where there is no work—in many parts of the north-east there is not a great abundance of work—there must be welfare that is enough to sustain families fairly. I know that in difficult times we all have to think about ways of reducing the bills that face the Government, but let us do that in a way that is proper, productive and economically and socially beneficial. Let us do it by stimulating, not stagnating, our economy; by unlocking the huge investment potential of UK business; and by creating hundreds of thousands of real jobs, building houses and reinvigorating our infrastructure, not by punitively poisoning the minds of ordinary people and punishing the poor.

16:03

[Alun Cairns (Vale of Glamorgan) (Con)]

This is obviously a difficult debate. Any debate that discusses cuts or limits to payments is difficult, and no one should take any pleasure in it. However, two fundamental elements need consideration. The first is the tax credit system as a whole and its purpose, and the second is how benefits in general relate to income. I will briefly take each in turn.

It is hard to believe that until the last general election, anyone earning up to £60,000 a year could still qualify for tax credits. That was nonsensical and crazy. At the time, £60,000 was nearly two and a half times the average salary, but the Government of the day still chose to issue those privileged people with welfare payments.

[Sheila Gilmore]

The Bill is not about restructuring the tax credit system but about placing a limit on an uprate. Much restructuring has already happened: has not £14 billion already been taken out of the tax credit system? The hon. Gentleman should address the issue of uprating.

[Alun Cairns]

I wish that the hon. Lady would at least allow me to create a context and develop an argument, and that she would focus on the real issue and allow me to develop arguments on that. To me, someone who earns £60,000 a year is quite privileged and should not be receiving those payments. Nevertheless, that was the position inherited by the Government.

[David Rutley (Macclesfield) (Con)]

Will my hon. Friend remind the House what steps the Labour party took to bring benefit increases closer to the world of work when it was in office?

[Alun Cairns]

I am grateful to my hon. Friend for that useful reminder that the Labour party did nothing on the issue. Few individuals—if any—would reject a benefit payment, even if in their hearts they were confused about why they were receiving it or uncomfortable with that. The then Chancellor knew well what he was doing and that withdrawing a payment after issuing it in the first place would create a difficult and almost impossible situation—the situation we are in now. Dependency on the state became more widespread, and with that came a significant political shift to the left. The centre ground of politics moved at that moment. It is, therefore, little wonder that £90 billion is now spent on welfare for people of working age.

During the seven years before the last general election, tax credit spend increased by a staggering 258%—that is the context I wished to create in response to the hon. Member for Edinburgh East (Sheila Gilmore). Adding insult to taxpayers’ injury, the tax credit regime was one of the most inefficient benefit systems ever devised, leading to £2 billion of fraud each and every year. Today’s Bill will lead to savings of £1.9 billion over two years, with the pain shared by those recipients whose increases in benefits will be limited. Although £1.9 billion is a significant sum, it does not go anywhere near the increases in spending introduced by the previous Government, particularly leading up to the 2010 general election.

[Ian Austin (Dudley North) (Lab)]

Will the hon. Gentleman give way?

[Alun Cairns]

I will in a moment but I want to develop my argument a little further. Presumably in an effort to drive the landscape even further to the left, tax credits increased dramatically—strangely—in the run-up to the 2005 general election, and, by coincidence, in the run-up to the 2010 general election.

[Mr Marcus Jones (Nuneaton) (Con)]

Given the political manoeuvring and increases in tax credits that my hon. Friend describes, which took place under the previous Government, is there a direct correlation between the time that tax credits started, the start of the financial crisis, and the substantial rise in the deficit created by the Labour party?

[Alun Cairns]

My hon. Friend makes an excellent point. The previous Prime Minister knew exactly what he was doing and he did it for party political ends rather than to support and help families who needed tax credits.

[Ian Austin]

If the hon. Gentleman is so worried about helping people further down the income scale, why does he support a tax cut for people who earn more than £150,000 and a reduction in the living standards of the poorest people in Britain?

[Alun Cairns]

That is right on cue because I remember the 50% tax rate as being temporary. Is the hon. Gentleman saying that he is committed to that rate leading up to and beyond the next general election?

[Ian Austin]

I would rather see people who earn more than £150,000 make a contribution than take money off the poorest people in Britain, which is what the hon. Gentleman is arguing for today.

[Alun Cairns]

I would have much more respect for the hon. Gentleman if he told the House that that will be his commitment at the next general election.

[Ian Austin]

We will announce our policies for the next election but they will not be to give tax cuts to the wealthiest people in Britain while hammering the poorest. That is what the hon. Gentleman and his colleagues are supporting today.

[Alun Cairns]

It is obvious that there are two options. Either that will not be a commitment going into the next general election, or the Labour Government introduced the only temporary tax rate that would last almost 10 years. I hope the hon. Gentleman will allow me, in the minute I have left, to develop my second point.

On benefits and incomes, it is difficult to believe that out-of-work benefits have increased by 20% since 2007 and that earnings have increased by half that amount. What is the incentive to work? The Labour Government left a marginal rate of tax of 80% for some of the lowest earners and those on benefits. What sort of incentive was that to get people into work? They continue with the same principle in this debate. That inequality must be resolved, particularly given the nation’s debt, the need to encourage people into work and the demand for structural changes in the economy to deliver growth. It is Labour’s policy to increase spending, taxes and benefits and to take us into a further spiral of increased borrowing, spending and taxes. The people will not stand for it.

16:10

[Dame Anne Begg (Aberdeen South) (Lab)]

I have sat through a lot of annual debates on benefits uprating, but I have never seen a turnout quite like this. Very often the number of hon. Members in the Chamber is less than double figures. I hope today’s turnout reflects the importance of the debate. The votes tonight will have a profound effect on many of the most vulnerable and poorest people in our society, whether they are in or out of work. Based on the decisions we take tonight, for some families it will not be a case of whether to eat or heat. Towards the end of the two weeks or the month when universal credit is introduced, some families might have a few days when the children get neither food nor heating, unless food banks, which are increasing, come to the rescue. We should not wish that on our society in the 21st century.

[Mrs Moon]

An additional problem is that low-income families—some working, some not—will be faced with a decision when their housing benefit is paid directly to them of whether to pay their landlord or feed their children. Does my hon. Friend accept that we are facing a potential explosion in homelessness?

[Dame Anne Begg]

I thank my hon. Friend, because she sets up my point on how the proposals undermine the Government’s flagship policy of introducing universal credit. Universal credit will create problems—she alludes to the fact that it will be paid monthly, and that housing benefit will be paid directly to individuals, who must make the decisions she describes.

One big claim for universal credit is that it will make work pay in all circumstances, but Government Members somehow cannot understand that making work pay means increasing benefits, because the majority of people who receive the benefits that will be affected by the Bill are in work. The group who are out of work and the group in work are often the same people, as my hon. Friend the Member for Westminster North (Ms Buck) has said—they move in and out of work.

The principle of universal credit is to smooth the move into work. The Government are freezing the benefits that make up universal credit statutorily for the next three years. I do not know why we are not having the normal uprating debate. There is no reason why the measure must be in the form of legislation, which makes me suspect that it is a political decision. The freezing of those benefits will tie the Government’s hands on the introduction of universal credit and could undermine it.

In spite of everything that has been said today, tax credits were a huge success. They increased the income of workers on low wages and made work pay. For the first time in at least two generations, the poverty trap was ended—I thought that it had gone for ever. There was a genuine poverty trap created by the previous Conservative Government and to all intents and purposes tax credits got rid of that. Almost everybody was better off as a result of tax credits unless they lived in a high accommodation cost area such as London or they had a large number of children. Work paid. The incentives did not always work because work did not pay enough. Through the Bill, the Government are repeating the same mistake—the incentives to move into work under universal credit will not be high enough to make work pay in all circumstances.

[Bill Esterson]

My hon. Friend is making an excellent point about the impact of universal credit. I am sure she is aware that the DWP itself says that 1.8 million main earners will be worse off if they take extra hours under universal credit than they are under the current arrangement. The figure for second earners is 300,000.

[Dame Anne Begg]

Indeed, and Barnardo’s has just published a report which says that families that depend on child care to allow the adults to work will be worse off if they increase their hours. The claims that are being made for universal credit—that it will do away with the cliff edges, smooth the transitions and make work pay in all circumstances—are false. The Bill will make that more likely to happen, not less likely.

Welfare benefits have already been attacked and reduced. We have heard today about housing benefit. Still to come are the changes to council tax benefit, and tax credits have been frozen for the last two years. We now know that universal credit will be set at a level comparable to the benefits that it will replace—income-related job seeker’s allowance, income-related employment support allowance and housing benefit, as well as tax credits. If those benefits have not increased with inflation, by the time universal credit comes in it will be set at a much lower level as a result of the decisions taken today. That will mean less support through universal credit for those moving into work. Unless the Government intend to change the tapers and the disregards—and I have heard nothing to suggest that—the difference between being in work and out of work will not be very great, and on many occasions people could be made worse off by increasing their hours or taking work in the first place.

I have always suspected that when the Government said that no existing claimants would lose in cash terms from the introduction of universal credit, it was their intention to reduce what people were receiving before the move to universal credit. This Bill confirms that that is exactly what they intend. They seem to have missed the essential point—to make work pay, the Government need to increase in-work support, not decrease it as this Bill will do. So when universal credit is introduced and fails to be the magic bullet that the Government have claimed—when it does not do all that has been claimed—they cannot say that they were not warned. That is why I will not support the Bill and will vote for the amendment.

16:18

[Jessica Lee (Erewash) (Con)]

It is a great pleasure to follow the hon. Member for Aberdeen South (Dame Anne Begg), who brings great expertise and experience to the topic. While I may not always agree with her on how to resolve welfare benefit issues, I always respect what she has to say.

For me and many others in the House, the central motivation for being here and practising politics is simple: it is to try to improve the country in which we live, to give opportunities to everyone, and to create an environment in which businesses can flourish, jobs can be created and young people can be equipped with the education and skills that they need to do well. At the heart of every civilised society is the protection of those who cannot work or care for themselves and need help.

It is unlikely that many people will disagree with that opening statement, but, as ever, it is where the balance falls. It is how fairness is achieved that often divides us in this place. The underlying focus of the welfare state must, of course, be to help to prepare and equip people for a life back in work. My concern is that over the years—in particular, under the previous Government—the admirable and compassionate aim of the welfare state, of getting people back on their feet, in some circumstances provided an alternative lifestyle and lifelong income. That is the issue that the House has to address on Second Reading, and in other legislation.

The work ethic was a central part of my upbringing. I stand here as the first person in my family to study A-levels, let alone go on to university. I am very proud of my background. My mother was the main breadwinner in our family—she was a children’s nurse in the NHS for more than 40 years. My late father worked in shops, in retail, and unfortunately had periods when he was not in work. However, he always remained focused on the importance of getting back to work, and my parents instilled in me a strong work ethic, a desire to work hard and to achieve my goals.

Role models are important in life, and the lack of hard-working supportive role models can make the challenge of getting back to work even harder. We now have nearly 2 million children growing up in homes where no one works. Nearly 900,000 people have spent at least 10 years claiming incapacity benefit. It can be difficult to find the self-esteem and motivation to move back into work after such a period of time, but I have seen from this Government a commitment to encourage people, and to provide and facilitate a way to get them back and to reach their potential.

In my constituency of Erewash, many churches and community groups are undertaking excellent work. One church in particular, the Arena Church, undertakes a vast programme of outreach and supportive work. It tells me that it has seen people in the last year blossom, find their self-esteem and move back into employment, often after years of not working.

[Mr Kevan Jones]

What would the hon. Lady say to the 59-year-old gentleman who came to see me on Saturday at my constituency surgery who suffers from schizophrenia and has failed the work capability test? He has now been sent on a security guard course by his local jobcentre, which is totally inappropriate. Why do we have a system that is so cruel to such individuals?

[Jessica Lee]

I thank the hon. Gentleman for his intervention, and he takes up the case on behalf of his constituent in this House. However, I put the responsibility squarely on his Government, the previous Government, who expanded the welfare state with tax credits and left people on incapacity benefit who for too long were never reassessed. That is unfair to those people and we need to recreate the entire welfare system to improve it.

[Mrs Anne Main (St Albans) (Con)]

It is always worth saying that there is no Government money, only taxpayers’ money. It behoves us to ensure that taxpayers’ money is used as well as it possibly can be.

[Jessica Lee]

I agree with my hon. Friend and thank her for her intervention.

The welfare budget has increased considerably over many years. The Department for Work and Pensions already spends more than £90 billion a year on welfare for working-age people—£1 in every £8 that the Government spend. Limiting certain social security benefits to the 1% that is before the House today, and tax credits is a proportionate approach to funding welfare in the longer term.

My constituents in Erewash often say to me that fairness works both ways. One gentleman said to me that he is working around the clock and his wife has two part-time cleaning jobs, and that they are trying their best to keep things going. Like me, he wants to support people in this society who, for whatever reason, will never be able to stand on their own two feet and get work, but that was not his point. His point was about the standard of living of other people in the area on full benefits. He did not think it right that they should have a higher percentage increase than his family’s budget.

The financial mismanagement of the welfare budget by the last Government—increasing and increasing tax credits without the financial means to pay for it in the long term—has created an imbalance between families, and it is not the fault of those families; it is the responsibility of those in government at the time. The books have to be balanced and accountability is required. Between 2003 and 2010, Labour spent £171 billion on tax credits— more than 60% of the welfare budget increases. How on earth it expected to make that financially viable I simply do not know. At the same time, the number of the most vulnerable and of children living in poverty increased, heading up to between 2 million and 3 million. The last Government failed to tackle the cause of worklessness, and that is why we are in this difficulty.

I take full responsibility for every vote I cast and everything I say in the House—I am happy to do so —but I can reassure my constituents that I do not think anyone in the House takes these decisions on welfare lightly. In the wider picture, however, of maintaining the safety net of the welfare state, preparing people for work and setting them free from welfare dependency, today’s proposals are proportionate and necessary, and I will support the Government.

16:26

[Hywel Williams (Arfon) (PC)]

Today, we are debating an uprating Bill that will result in a real-terms cut in support for people working and contributing to the economy. That paradox will not be lost on those hard-working families so beloved of spin doctors. I do not see how the Bill will promote the work ethic so beloved of those on both sides of the House, and I do not see how it will enable working people to contribute more effectively in the savings culture.

As a Welsh MP, I have to say that Wales will be hit particularly hard. Incomes in Wales are substantially lower than elsewhere. Gross value added per head in Wales is £15,696, whereas in the UK it is £21,368—a difference of more than £5,500 per person.

[Alun Cairns]

Given what the hon. Gentleman has said, is he comfortable that welfare payments are rising at twice the rate of earnings?

[Hywel Williams]

This point has been done to death this afternoon. It says a lot about the quality of the hon. Gentleman’s argument that he repeats it continually. I do not think I will bother with it any further.

Some 6.8% of households in the south-east of England, for example, claim working tax credits. In Wales, that figure is 7.1%. In Gwynedd—my own area—9,200 families are on tax credits of some form out of 53,000 households. That is 17.5% of the population—nearly three times the Welsh rate. The point is that any cuts to in-work benefits for the low-paid will hit Wales and my constituency particularly hard.

[Mr Kevan Jones]

Does the hon. Gentleman agree that the individuals receiving those types of benefit do not save the money, but spend it in their local communities? In areas of high unemployment, such as parts of my and his constituencies, it will have a knock-on effect on the local economy.

[Hywel Williams]

Clearly, the hon. Gentleman is blessed with clairvoyance, because that is my next point. People on low incomes tend to spend locally and to spend all their money. The Welsh economy is overwhelmingly made up of small businesses. That is a point for the hon. Member for Vale of Glamorgan (Alun Cairns) to consider. Working tax credit reductions will suck demand out of local economies and make matters even more difficult for small businesses struggling to survive in the recession.

The uprating will also hit those seeking work. The Prime Minister talks of unemployed people abed while others are at work. We can almost see him in Shakespearean mode paraphrasing King Henry: “Gentlemen in England now abed shall think themselves accursed they were not out seeking work”—I can see him doing it anyway, but less extravagantly. Unlike the Prime Minister and his friends, I do not think that the overwhelming majority of unemployed people are abed; they are seeking work. They want to work; they want to improve their lives and those of their children. For those who do not seek work, there is a system of sanctions, and there has been for a long time, as the Secretary of State knows full well.

Poorer areas of Wales have long suffered from high levels of worklessness and low levels of job availability. To end the misery of unemployment, we need not only to help individuals with their skills and, in a small number of cases, their motivation, but to ensure there is real work for people to do. Recently published Work programme figures for Wales show that success there was the lowest in the UK, with only 1,380 of 42,380 people getting a job that lasted six months or more. That is a miserable success rate, at only 3%. In Wales, more than 77,000 people are looking for work and claiming jobseeker’s allowance, while only 20,000-odd vacancies are being posted in jobcentres. Across Wales, there are four people chasing every job, with 11 people chasing every job in Blaenau Gwent and 21 people chasing every job in the Rhondda.

That brings me to Labour’s amendment. I have a question, to which I would like an answer—which might persuade me to back the amendment—in the wind-ups. Long-term unemployed people might still be unable to find a job after 24 months of searching. Large-scale work opportunities are just not available in many Welsh constituencies, so my question is: under Labour’s scheme, would those people face penalties after 24 months? If Labour’s scheme were adopted, would we see benefit cuts 24 months down the road for people who are not refusing to find work, but who just cannot find a job?

We in Plaid Cymru have been as good as our word—to the extent we can be—to the people of Wales, securing thousands of extra apprenticeships as part of the Welsh Government budget deal. We are now pushing for a new procurement policy that would create 50,000 jobs by sourcing public sector contracts locally. However, Wales needs proper job-creating levers to improve our economy, not just handouts and certainly not workfare. For example—this might be a domestic matter as far as most Members in the Chamber are concerned—we want full and early implementation of part 1 of the Silk commission proposals. We also want the transfer of responsibility for Jobcentre Plus to the Welsh Government. There are answers to joblessness and dependence on benefits. At present, we in Wales look in vain to London and the London parties for those answers.

16:32

[Mr David Ward (Bradford East) (LD)]

This is not a difficult one for me. I believe that benefits are far too high—I think most people accept they are at an unsustainable level.

[Mr Kevan Jones]

Too high?

[Mr Ward]

Yes; as a nation, our payments on benefits are, without a doubt, far too high. However, what we face in this Bill seems to be a huge lack of confidence by the coalition in its own policies and programmes to deal with that situation.

None of us is going to support scroungers, skivers or people who are fraudulently claiming disability benefits. None of us is going to say that we should not support people into work, but we on the Government Benches say, “We are doing all of that.” We on this side of the House say that we are dealing with the situation so that we can reduce the colossal welfare bill to the nation. It shows a huge lack of confidence for us then to say that we now need to go to the least well-off in the country and say, “You’ve got to make a contribution to deficit reduction,” because if our measures work—we say they are going to work; we tell people how successful they will be—what are we left with? We are left with those who want a job and cannot get one, even when they have been through the Work programme. We are talking about those who are disabled—and who have been assessed as disabled—who are not able to work. We are talking about those in work but on low incomes. Despite the confidence in our strategy, these are the people to whom we are now saying, “We’re not really sure, because we’re going to have to come to you, for you to make a contribution as well.”

I have identified three arguments for this move. The first relates to incentives, and states that work should always pay, but I thought we were going to ensure that that happened anyway. Is that not what universal credit was supposed to be about? The second argument is that we cannot afford to do otherwise, but I did not see much cutting back on the Olympics. I have heard various suggestions, and yes, there are tough decisions to be made. It has been suggested that we limit the tax relief on pensions. We are seen as being able to afford to give tax reductions to millionaires, and of course we can afford to give rich pensioners winter fuel payments. These are examples of the decisions that need to be made, and there are many more, but we need to look at all of them before we turn to the people on the lowest incomes and those with no income who are surviving on benefits.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the hon. Gentleman agree that the fiscal cliff deal made last week in America, which took the most money from the top 2%, gave money to those on lower incomes and is projected to increase growth by 1%, is a much better way of squaring the circle than the measures in the autumn statement, which will take money from the bottom 30% to 50% and give it to those further up the ladder, which is reducing overall consumer demand?

[Mr Ward]

We all know that. We know about the multiplier effect on consumer demand. It is not a secret; it is well researched and we all understand it.

The third reason for the proposals that I have identified relates to fairness. A national debate about fairness is taking place at the moment. I am about to get really technical: there is a difference between somebody who is unemployed and somebody who is employed. The person who is unemployed does not have a job. The person who is employed has a job. They are not the same; we cannot compare them when we are talking about fairness and a 1% increase. I will give the House another really technical fact: those people who are on low incomes and receiving tax credits are receiving those tax credits because they are on low incomes. It is very technical, this. How on earth can we compare those on low incomes or on benefits with people who are in a job? We cannot say that it is unfair—or bizarre, according to the Prime Minister—to give someone who is in a job 1%, but then give 2% to those on benefits. We cannot compare the two. There is a difference between somebody who is on benefits and somebody who has a job. The evidence for that is clear.

Of course, people who are in employment do not like the pay freezes or the 1% increase, but is anyone seriously suggesting that they would give up their job to be unemployed? Don’t be ridiculous! Let us not forget that we are eliminating the scroungers and all the rest of it. In my experience, most people in work look at those who are unemployed and say, “Thank God it’s not me!” They do not say that it is unfair that their benefits are being increased; they say, “There but for the grace of God go I.”

I have mentioned the massive lack of confidence in our proposals, but there could be another reason for these measures, although I hope that it is not true. It relates to a sense that the public at large are in favour of these welfare reforms, egged on by opinion polls, and that some people on the Government Benches see that as an opportunity to attack the unemployed. I fear that that is being driven by a deep-rooted conviction that unemployed people are unemployed by choice. This is what worries me. I hope that the explanation is in fact the lack of confidence, but I suspect, deep down, that far too many people on this side of the House believe that unemployed people are the undeserving poor, that they need to sort themselves out, and that we cannot possibly reward them with an increase. Let us remember, too, that this is not an increase. When inflation is taken into account, the measure will simply freeze the level of benefits that we have already decided will provide people with a minimum standard of living. The measure is not fair, and I will not support it.

16:39

[Derek Twigg (Halton) (Lab)]

The Bill is without doubt an attack on the living standards of those who are in work and on low or modest incomes, and of those who are out of work and on disability benefits. The Government have tried to paint those who are unemployed as lazy and as scroungers, but it is a fact that the Bill will definitely make people poorer.

The Government are trying to cover up their failures on the economy, and the Chancellor is now raiding working-age benefits and tax credits by a total of £6.6 billion by uprating them by 1% over the next three years—a real-terms cut. Meanwhile, the Government are giving 8,000 millionaires an average tax cut of £107,000—an average cut of £2,000 for every week of the year. In comparison, people on jobseeker’s allowance will see their benefit go up by 71p and people receiving the couples element of the working tax credit will see a maximum increase of 38p. Of course, the Secretary of State has admitted today for the first time that disabled people will also see cuts as a result of the changes made.

[Ann McKechin (Glasgow North) (Lab)]

I am grateful to my hon. Friend for making some strong points. Does he agree with me that one other group of people in our society who will be severely impacted by the change is children? We are going to see an increase in absolute poverty and relative poverty for children, which will take us back to the level we had over 10 years ago. It is wholly unfair that they should be prejudiced in this manner.

[Derek Twigg]

I agree with my hon. Friend, who makes a valid point, and I repeat that people, families, children will be made poorer by the Bill. The Secretary of State refused properly to answer a question about the disabled issue. He would not say how many disabled people would be affected, so that is a subject to which we will certainly return.

Of course another group of people who will be badly hit are women. Some 4.6 million women who receive child tax credit, including 2.5 million working women and more than 1 million women who are caring for children while their husbands or partners are in work, will be hit by this strivers’ tax. Even the Government’s own impact assessment, which we have just got, acknowledges that that will be the case—and it is a disgrace, if I may say so, that we received that impact assessment at such a short time before this debate. Those hit by the Government’s cuts include primary school teachers, nurses and, as we have heard, many members of our armed forces who today are fighting for this country. My constituents are increasingly suffering because of the rising cost of living. The costs of food, energy and fuel are crippling many families, who are having to decide whether to buy a decent meal or to heat the house.

[Andy McDonald (Middlesbrough) (Lab)]

My hon. Friend mentions primary school teachers and nurses. Does he acknowledge the figures in last Sunday’s edition of The Observer in which chief executives of a number of organisations, including children’s societies, Barnardo’s and the National Association of Citizens Advice Bureaux, showed that a single parent primary school teacher or a nurse with two children stands to lose £424 a year by 2015 while an Army second lieutenant with three children will lose £552 a year? Those are hardly people whom we should describe as “scroungers”.

[Derek Twigg]

My hon. Friend makes a strong point: many people in work are being hit, and many of them would not usually be viewed by members of the public as those likely to be hit by such changes. Many families on low incomes in my constituency are having great difficulty finding the money to feed their families properly—even to provide proper meals every day. We know that some children are going to school hungry. The problem is so bad in Halton that two food banks have been set up, and I believe that that is a regular feature in many poorer parts of the country. To add to that, of course, are the appalling changes to housing benefit and the unfair cuts to local government funding, including changes to the treatment of council tax support, which will greatly increase the suffering in my constituency and others where the poorest and the weakest will be the most badly hit.

Frankly, the Government’s approach to welfare reform is cruel and vindictive, with cuts hitting the most vulnerable the hardest. That is said even in the Government’s own impact assessment, which acknowledges that the poorest will be hit the hardest. It is a disgrace that this is happening. I have been contacted, like many MPs, by many constituents who have suffered badly under the benefits system, who have lost benefits or who have been denied them or treated badly. In many cases, these people are in despair and at the end of their tether. We have to deal with such cases—day in, day out. It is therefore important to link that with what is happening today.

There are, of course, people who exploit the system, and they should be dealt with severely, but the overwhelming number of people involved are honest and want to work where they can. In my experience, those who can work want to work. I have heard many tales of constituents applying for countless number of jobs, but getting nowhere because jobs are either very hard to find or do not exist. Despite what the Secretary of State said, many want full-time employment. Many are being pushed into part-time employment because there are no full-time jobs for them. The Government have no coherent policy for growth and jobs. That is why people trust Labour more on jobs and growth. We have given greater priority to job creation, which is why I support our jobs guarantee.

[David T. C. Davies]

Will the hon. Gentleman give way?

[Derek Twigg]

I will not, because I have already given way to two Members and others wish to speak.

Let me return to the Government’s decision to cut benefits. We should not forget the announcement in the June 2010 Budget that from April 2011 the measure of price inflation used for the uprating of benefits and tax credits would be the consumer prices index rather than the retail prices index. That will have a significant impact on benefit rates and on future real-terms cuts. So in addition to what is happening today, a major cut is already taking place. The long-term assumption of the Office for Budget Responsibility is that the annual increase in RPI will be 1.4 percentage points more than the increase in the CPI. That means that after 10 years, benefits will be worth 86% as much as they would have been had they continued to be uprated in line with RPI.

The House of Commons Library research paper on the Bill states:

“A decision to limit increases in benefits to below inflation for a sustained period is historically unprecedented. If inflation averages more than 1% over the three years, families claiming the benefits and tax credits affected will experience a permanent real terms reduction in the support they receive.”

It goes on to say that

“independent estimates of “Minimum Income Standards” suggest that current out-of-work benefit rates for people of working age are significantly lower than the amounts necessary for a minimum acceptable standard of living.”

We should never forget that a large number of those who receive benefits are being paid a very small amount of money, an amount that would surprise many people. It is not the case that the majority, or anywhere near the majority, are receiving massive sums. Members should go and talk to a young person who is unemployed, or a single mum, or a couple, and ask about the benefits that they are receiving—and now disabled people are also being hit by the Government’s proposals.

The Bill clearly constitutes a tax on those who work hard and a cruel, vindictive cut in the living standards of the poorest people in our society. The Government should hang their heads in shame, and that applies especially to the Liberal Democrats.

16:46

[Kris Hopkins (Keighley) (Con)]

About 40 years ago, I used to walk through a really run-down council estate on my way to school. The estate was poor, the people living there were poor, the housing was poor, and life expectancy and opportunities were very low. It is still the same today: 40 years on, the people living on that estate have the same opportunities, or lack of them, that they had in the days when I was walking through it.

Successive Governments have failed to address the problems of people who live in poverty in some of our communities. This is not just about money; it is about a lack of aspiration and ambition, about a failure to understand the need to educate people, and about the need for people to develop skills. It is about a whole range of things, and the solution is not simply money. I say that because now, when I look at estates like the one that I mentioned, I see brand-new schools, and I see that all the houses have been done up, but the people are still poor, still unemployed, and still dependent on benefits. The fact is that, regardless of the 1.5% difference between inflation and the uprating, if you have not got the brass you cannot give it out. The purpose of the coalition must be to manage the deficit that we inherited from the last Government, and we must change the culture of dependency in those areas.

[Phil Wilson (Sedgefield) (Lab)]

The hon. Gentleman talks of dependency. Does he not realise that the Bill will create a food-bank dependency in our nation?

[Kris Hopkins]

I do not think that it will. I think that the 900,000 or 1 million new jobs created by the Government represent the solution to the problem. We need to face up to the drama in the welfare state. The hon. Member for Wigan (Lisa Nandy) says that this is not about a dependency culture, but I can take her to places where people are trapped in a way of life that gives them no incentive to go and look for jobs. That is the tragedy of the situation.

[Mr Kevan Jones]

I understand what the hon. Gentleman is saying about the dependency culture—he thinks that if he repeats it enough, people will start to believe him—but what would he say to two people whom I met in a local jobcentre last week? They were made unemployed by AEI Cables in Birtley a year ago. They have the work ethic. They are aged 51 and 52, they had worked for the company since they were 16, and they have applied for literally hundreds of jobs without success. Are those people part of the dependency culture?

[Kris Hopkins]

No, obviously not, because they are going out there to seek a job. That is the key thing. I thank the hon. Gentleman for the extra time.

We have put a benefit cap at £26,000, and that is net. The vast majority of my constituents would be delighted to take home or have access to that amount of money. Far from doing something outrageous by increasing the amount of money that people are going to get by 1% in this climate, it is an admirable move by those on the Front Bench to facilitate that, bearing in mind the crisis that the previous Government left.

We have made some choices about who we are going to protect and who we will not. There is a debate about disability, but I am pleased that we are protecting pensioners. It was a commitment by this Government to protect pensioners and we have continued with that. I am very concerned that the unemployed, those who are dependent, those who are uneducated and have no skills, those with limited opportunities to offer young people, are the families that are growing in my constituency. That is a tragedy for the future of towns such as mine. We must break that cycle. It cannot be right that it pays to live on the state.

The resentment and anger are real in people who are working hard. They have seen generations continue to claim benefit. Some of those are trapped, but some have no desire to go and work. People are making life choices based on the fact that they can get money from the Government. As was pointed out earlier, that is taxpayers’ money. That cannot be right. When families see no increase in their income after their hard work and they see people on benefits receiving twice the increase, as has been shown statistically, that promotes resentment in our communities. It is not just about strivers or skivers. Failure to address the issue promotes racism and tension in communities, because somebody sees or perceives that somebody else is getting something that they are not getting. After all their efforts they do not see the benefit of working so hard.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

rose—

[Kris Hopkins]

No, I will not give way.

I have great sympathy for all the people who go out there, graft hard and pay their dues, and then look over next door where the curtains are closed or see estates where people are not ambitious, not aspirational, have failed in education and failed in skills. It is the responsibility of those on the Government Benches to address that, as much as it was with the previous Government. In another 30 or 40 years I do not want to see people living in poverty because they have been abandoned and people keep sustaining those estates. Society backfills sink estates in constituencies such as mine.

We do not take decisions about welfare lightly. We take them extremely seriously, as my hon. Friend the Member for Erewash (Jessica Lee) said, but we on the Government Benches are on the side of hard-working individuals. That is why I support the Bill.

16:53

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I rise to speak on behalf of the many constituents who come to see me every week in my constituency office because they have been affected by the Government’s attacks on our welfare system. I have said this before and I will continue to say it: at every point we must challenge the ideology underpinning these so-called reforms, including the Bill, and the divide-and-rule narrative that the coalition Government have developed.

I know I was not alone in being deeply offended by the Chancellor’s autumn statement, not only because the cuts he put forward will affect the poorest 10% in our society, according to the Institute for Fiscal Studies, but because of the way in which he attempted to justify his actions by deliberately vilifying people who receive benefits as the new undeserving poor. By using pejorative language, such as “shirkers”—he has used the terms “work-shy” and “scroungers” in the past—he sunk to a new low, with a disgraceful misrepresentation of the facts, a few of which I would like to put straight.

Myth No. 1 is that most people on benefits are out of work. In fact, 68%—more than two thirds—of benefit recipients are in work. The majority of welfare beneficiaries are net contributors to the Exchequer. As my right hon. Friend the Member for Leigh (Andy Burnham) has said, there is no evidence of a culture of worklessness in this country—[Interruption.] I will repeat that: independent research has shown that there is no evidence of a culture of worklessness. According to the Joseph Rowntree Foundation and the New Policy Institute, 6.1 million people are in poverty but are working. That compares with 5 million people in out-of-work households.

As we have heard, the Children’s Society’s statistics show that the proposed cap on welfare benefits will affect 500,000 key workers—nurses, midwives, nursery school teachers, primary school teachers, administrative workers, secretaries, shop workers, electricians, fitters and members of the armed forces.

[Mr Andrew Turner (Isle of Wight) (Con)]

Can the hon. Lady say what proportion of primary school teachers are covered by those statistics?

[Debbie Abrahams]

I cannot because I do not have the figures to hand, but I am happy to provide them later. The evidence is there. Scenario modelling has been done—[Interruption.] If I could finish the point. Scenario modelling is available showing exactly how many have been assessed.

[Mr Stewart Jackson (Peterborough) (Con)]

Will the hon. Lady give way?

[Debbie Abrahams]

I will not give way at the moment. I will finish my point and then make some progress.

The Children’s Society’s analysis shows that between £500 and £400 will be lost per annum by key workers such as a second lieutenant in the armed forces or a primary school teacher.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

In addition to the scenario my hon. Friend is outlining, these cuts come on top of the fact that the move from RPI to CPI for benefits will push a further 4 million children into poverty by 2020.

[Debbie Abrahams]

My hon. Friend is absolutely right. The Institute for Fiscal Studies has shown that nearly half a million more children will be living in poverty by the end of this Parliament, and that is without taking into account the 1% drop. Families up and down the country are struggling. Food prices have increased by 26% over the past three years, almost as much as energy prices. That is a real cut for ordinary families.

The second myth I would like to expose is the claim that welfare benefits have increased more than average earnings. In fact, since 2002 average earnings rose by 36% while jobseeker’s allowance, for example, increased by 32%. Between 2007 and 2010, to ensure that work pays, benefits for people in work rose by 53.1%, compared with 46.9% for out-of-work benefits. The Government have also claimed that the 1% cap will offset increases in tax thresholds. We know that at least 682,000 working families receiving child tax credit earn less than £6,420, so they will not benefit from those changes in tax credits.

I was going to refer to the myth that we need to do this to reduce the deficit, but that myth has already been blown out of the water in other contributions, so I will not go on about the fact that growth has been downgraded yet again, we are borrowing more than anticipated and our economy is one of the worst performing in the G7.

The Government’s response to their failing economic policies is what? It is to give tax breaks to the wealthiest in society. Some £3 billion is being given to 300,000 people earning more than £150,000 a year, with an average gain of £10,000, and the Government are making people on low incomes pay for it. According to the Office for Budget Responsibility, £500 million will be saved as a result of the 1% cut in 2013 and just over £2 billion in 2014, but that money could also be saved if the Government made different choices. It is clear where the Government’s priorities really are. The choices that the Government have made are underpinned by their ideology.

[Several hon. Members]

rose—

[Debbie Abrahams]

No, I am not going to give way any more.

That ideology is to demonise people receiving benefits, creating antipathy and resentment and an “us and them” culture. Through the withdrawal of universal benefit such as child benefit, the Government show an irrelevance of the welfare system to non-welfare-recipients; meanwhile, they are dismantling the welfare state.

I am proud of our model of social welfare, born of the second world war, when we were literally all in it together. I want to retain that model, with its principles of inclusion, support and security for all, protecting any one of us who should fall on hard times and ensuring our dignity and the basics of life to help us get back on our feet.

Fortunately, the British public are seeing through the Government. As British social attitudes surveys have consistently shown, they want not a divided society but a fairer, more equal one. That has been reflected in recent opinion polls on benefits. When the Government’s myths are exposed to people, most do not support them.

I do not want ours to be a country where we impoverish children and rob them of their futures. We need to get the economy moving again and I hope that the Chancellor and Secretary of State will listen to my right hon. Friend the shadow Secretary of State’s proposals about how we do that. If they do not, we are in danger of losing a generation, storing up health and social problems for the future—and seeing a divided Britain, not a one nation Britain.

[Several hon. Members]

rose—

[Mr Speaker]

Order. In a bid to accommodate more colleagues, I am afraid that I am reducing the time limit for Back-Bench speeches from five to four minutes each, with immediate effect.

17:00

[Mr Aidan Burley (Cannock Chase) (Con)]

In the short time available, I want to nail a couple of myths that have come up in the debate and give the view from Cannock Chase.

The first myth is that we are giving a tax break to the wealthiest in society. The answer that the shadow Secretary of State would not give earlier is that over a 13-year period, the Labour Government had a 50p tax rate for 37 days. The idea that we are giving the rich a tax cut is just a sixth-form debating point; the Labour party had 13 years to introduce the 50p rate, and they introduced it for 37 days.

Let us nail another myth. Although many people in work get benefits, there is evidence of a culture of worklessness, whatever the Joseph Rowntree Foundation says. If hon. Members do not believe me—[Interruption.] Give me a second. Let me read the House a summary of an interview on LBC radio in December. A man called Paul phoned in to say that it was not his fault that there were no jobs out there. He said:

“Why would you work for low wages, can’t really understand that, what’s the point? I was offered a job two weeks ago; they wanted me in there at 8 am in the morning.”

The presenter said:

“And you didn’t want to do that job?”

Paul replied:

“It’s ridiculous, that time!”

The presenter asked:

“What time would you finish if you started at 8?”

Paul answered:

“Well it finished about 4, but that time in the morning is too early. Most people start at 9 don’t they?”

The presenter, getting angry now, said:

“No, people start work at all hours. If I was in charge and you turned down a job for that reason I would cut your benefits. You lied you said no work out there. There are people out there struggling every single day who would love to get that job, frankly you can’t be fagged can you?”

Paul said that he would love to have the job but he was not willing to start at 8, only at 9.30, to which the presenter replied:

“I am outraged by what you just said.”

Let us not pretend that there are not some people who cannot be bothered to work.

[Mr Kevan Jones]

I am not sure whether that anecdote should lead us to any wider conclusion. The only worklessness in the Chamber today is on the Tory Back Benches—there has been an average of only 12 Tory Back Benchers all afternoon.

[Mr Burley]

I have been here since the beginning of the debate, waiting patiently to speak.

I move on to my constituency. The House of Commons Library shows that average wages in Cannock Chase rose by 6% between 2007 and 2012. During that same period, benefits went up by 20%. Where is the fairness in benefits going up by 20% when pay has gone up by only 6%? Do not take my word for it. This is what a local police officer e-mailed me last year when we uprated benefits by 5%:

“Why has the Conservative Government given a recent rise in benefits money…to the unemployed when Nurses, Police Officers, Fire and rescue workers and all other public sector workers have not received a pay rise for over two years?”

It is a fair question, and I do not know the answer. What I do know is that if the rate of inflation is not sufficient to warrant an increase in public sector pay beyond 1% in April this year, it cannot be so high as to require an increase in benefits beyond that either.

This is what another constituent who recently contacted me said:

“I have a friend who has a partner, neither she or he work and have not worked for as long as I can remember. They are both fit and healthy and perfectly able to work they just do not want to. They openly admit there is no point in finding work as they would not have enough money to live on. She stated to me that in order to get close in wages to what they receive in benefits that they would both have to get a job.”

This is the perverse reality of where we are now—that it pays people not to work and they are better off at home on benefits even though they could work and in many cases want to. Tellingly, the constituent went on to say:

“Some time ago she”—

her friend—

“let it slip out that she claimed £500 a week in benefits, I was…astounded and furious and pointed out that it was twice my wages. I am…aware that some people are unable to work and in genuine need…but surely people on benefits who are MORE than capable of working should not be living a life of…luxury and be financially better off than those who…earn a living? These people are playing the system…whilst…genuine hard working people struggle to have a life.”

Those are the real words of a real constituent in an area where the average salary is £22,500, and Labour Members ignore those words at their peril. [Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.

[Mr Burley]

The Opposition have argued that this uprating of 1% will impact on working people and not just those on benefits. Given that the previous Government made 90% of workers eligible as welfare recipients, that is inevitable. Unfortunately, Labour Members make the mistake of taking these measures in isolation. If we take the Government’s measures as a whole, including tax allowances, energy tariff changes and cutting petrol duty, low-income working households will be better off. It is time to end the ridiculous money merry-go-round. Let us take people out of tax and off benefits. Labour used to be the party of the working man; it is now the party of the workless and welfare. I look forward to fighting them on the doorsteps as they take that message to the electorate. [Interruption.]

[Several hon. Members]

rose—

[Mr Deputy Speaker]

Order. Before I call the next speaker, let me say that shouting back and forth really does not help the debate, and I am finding it difficult to listen to what the speaker is saying, so please let us have less of it. I call Steve McCabe.

17:07

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I apologise for being absent for part of the debate while attending duties at the Home Affairs Committee.

The one inescapable fact is that however much the Chancellor talks about shared pain, we are discussing real cuts to benefits at a time when he thinks it is okay to prioritise tax cuts for millionaires. We should no doubt be grateful that pensioners have been spared this cut in their benefits, but that is probably down to Lord Ashcroft having identified what a key group they are and putting their benefits off limits.

I am afraid that these proposals look like an ambition to create division between those who have little and those who have less. That sits comfortably with the values and politics of a particular kind of Conservatism. This is called an uprating, but 1% rises over three years really represent a cut of 4% in the spending power of those already struggling. Citizens Advice estimates that when we take tax changes into account, a family with two children paying £130 per week in rent and earning just above the minimum wage will be almost £13 per week worse off. That is before we take food and energy inflation into account. No wonder people are being driven into the arms of payday loan sharks.

Income transfers for those on modest incomes, for example, are recognised throughout developed economies as exactly the kind of fiscal stimulus needed when recessionary pressures are highest, but the Chancellor is doing the exact opposite. A total of 4.6 million women will lose their tax credits, including 2.5 million working women and more than 1 million who care for their children while their partner works—the same people who are also having their maternity benefits cut. Lord Ashcroft calls them “suspicious strivers”. In his words, they fear they are one more redundancy, one interest rate rise or one tax credit change away from real difficulty, and they would not want to rely on a Conservative Government if they found themselves in trouble.

[Mr Stewart Jackson]

For the record, 42,654 people in the Peterborough constituency will be better off under the tax changes in April. Is the hon. Gentleman not ashamed that under his Government, who presided over 16 years of economic growth, more than 1,000 people in my constituency were parked on invalidity and incapacity benefit for more than 10 years. That is shameful and it is his Government’s record.

[Steve McCabe]

I cannot wait for the hon. Gentleman to have to meet all those people who are better off at his advice centre.

The International Monetary Fund regularly warns about the dangers of cutting the automatic stabilisers in these economically fraught times, yet that is exactly what is happening. It is estimated—the IMF is the source —that these benefit cuts will contribute to a £40 billion reduction in the country’s output when we desperately need the opposite to happen.

As well as implementing benefit cuts that defy economic logic, the Chancellor has set up a special hotline for Tory MPs who are confused about his benefit changes. Special hotlines for Tory MPs, Government cars to cushion Ministers from rail-fare rises, and specially arranged meetings to cover the transport costs if they want to watch the European cup final—yes, they are definitely all in it together.

My contention is that these decisions do not make economic sense, are not fair and will punish the very people who are striving and struggling to make ends meet while the Chancellor’s millionaire friends are prioritised for tax cuts. That tells us all we need to know about this Government’s values.

17:11

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

The problem with this debate is that nobody has gone back to the idea of what the social security welfare state was for. It was brought in to make sure that people who were in desperate need at a time of unexpected circumstances did not fall into poverty. When somebody lost their job, that often meant they were stuck. That is why the social state was created.

I have sat throughout this debate and listened to many a speech, and the only Opposition Member who has spoken with any passion is the hon. Member for Gateshead (Ian Mearns). He gets it—he knows what the welfare state is about. All the other speeches by Opposition Members have, I am afraid, been about pure political point scoring. I do not doubt for one minute that the vast majority of Opposition Members care deeply about the poorest in society, as we do on the Government Benches.

[Jim Shannon (Strangford) (DUP)]

Will the hon. Gentleman give way?

[Alec Shelbrooke]

Just give me two ticks. The constant mocking that has gone on is shameful political posturing.

[Jim Shannon]

The two commodities that have seen the highest inflation are food and fuel, which affect those on a low income more than anyone else. Does the hon. Gentleman think that the Secretary of State’s benefits cap will enable those people to come out of poverty and go for jobs?

[Alec Shelbrooke]

The hon. Gentleman mentions rising food inflation, but let us not forget that we have just knocked 10p off the price of a litre of fuel. That 10p was in the Opposition’s plans and would have created extra inflation.

This debate has been polarised, but a divide has been in existence for more than a decade and it is coming to the fore. As soon as we try to address it, we are described as nasty and heartless and told we are not dealing with people fairly. The fact is that too many people in this country have the wrong idea about benefits, which is not a dirty word.

[Ian Lavery (Wansbeck) (Lab)]

The divide has not been in existence for just the past decade—Lady Thatcher and Geoffrey Howe hatched a plan to dismantle the welfare state more than 30 years ago. Is this Bill just another phase in bringing the welfare state to a conclusion?

[Alec Shelbrooke]

In the past 10 years, people have said time and again, “Why should I do this when someone on out-of-work benefits gets double the pay rise I get?” That is a fact. Wherever we may want to lay the blame and whichever way we may want to look at the issue, the fact is that people do not believe in the welfare state in this country any more. That is not just a tragedy; it is deeply worrying for this country.

The measures being taken by the Secretary of State, which we will vote through, will bring back some fairness to society. They are part of a big package of measures. However, we have a problem. We all want to give as much money to people—of course we do—but we cannot afford it.

[Penny Mordaunt (Portsmouth North) (Con)]

Does my hon. Friend agree that when there is a limited pot of money, it is better to spend it on high-quality advice and support for people such as older workers who are back in the job market and are struggling to cope than on increasing an already enormous welfare bill? That kind of advice is long overdue and has been long neglected. [Interruption.]

[Alec Shelbrooke]

I thank my hon. Friend for those comments. I just heard Opposition Members say from a sedentary position—we have heard this several times today—that there has been a tax cut for millionaires. Let me be blunt. All the evidence shows that when the 50% tax rate came in, £7 billion disappeared from the Exchequer. Today’s policy will save £1.4 billion from the welfare state bill. If Labour had not brought in the 50% rate, we would not have had to introduce this policy. Opposition Members cannot pick and choose the arguments; they have to look at things consistently and completely.

This debate has shown that the Government are trying to ensure that we have a fair system of social security that is there when people unexpectedly fall into terrible circumstances. Several Opposition Members have described people who have been made redundant recently and who need to rely on the welfare state. That is what social security is for. That is why people pay their national insurance contributions—so that they do not fall into the starvation and poverty that existed before the welfare state. What is shameful about the Opposition, as has been shown today, is that the Front Benchers are not linked up with the Back Benchers. The Back Benchers believe in caring for people, whereas the Front Benchers are trying to score political points. If the Labour party once again votes against reforming social security, let the message go out to the country that it is not interested in the poorest in society, but is interested only in bribing the electorate to try to get back into power.

17:17

[Yvonne Fovargue (Makerfield) (Lab)]

The proposal is to limit the increase in working-age benefits to 1% for the next three years, which is an effective cut. Let us make no mistake: for anyone who relies on benefits for all or part of their income, this will be a “poverty-producing policy”. Those are not my words, but the words of the Child Poverty Action Group. Working families are finding it hard to get by financially after two years of freezes in child benefit and working tax credit, and cuts to child care tax credit, housing benefit and support for new parents. It is no wonder that the CPAG is warning that the number of children living in absolute poverty will rise.

Let us look at what the proposal means for a full-time worker on the minimum wage. In a response to my hon. Friend the Member for Stockport (Ann Coffey), the Treasury confirmed that the working tax credit lost in 2013-14 by people who are working full time on the minimum wage, due to the Government’s freezes and the increase in the earnings taper, will be £475 for a single person with no children and £660 for a couple with one child. Contrary to the assertions made in Parliament, the amount of working tax credit lost by families with one earner on the minimum wage will be greater than their saving of £420 in 2013-14 from the increase in the personal tax allowance.

Many of my constituents work in low-paid retail work. I am grateful to the Union of Shop, Distributive and Allied Workers for the survey of its members, who all report how difficult it is to manage with the rising cost of food, fuel and other everyday items. Many report that they have turned off the heating at certain times in the month. Tracey said that although both she and her partner work, after paying for the rent, gas and electric, they often find it so hard to manage that they go without food so that their children can eat.

That situation is confirmed by the Oasis food bank in my constituency, which has recently begun to operate. Although I support its good work and pay tribute to it, I deplore the fact that such organisations are needed in the 21st century. The food bank tells me that many working people come to it as they simply cannot make their money stretch to the end of the month, and we know that more people are turning to payday lenders simply to get money to spend on essentials, not on luxuries any more. It is no wonder those payday lenders are circling the estates.

The people affected have not made a lifestyle choice. They are working people such as the one who came to my surgery who gets up at 5 o’clock to do two cleaning jobs. It is not a lifestyle choice for those who are out of work, either. It is a situation that they find themselves in, like the young man who worked at Comet and lost his job, and is now competing with seven others for every job in my constituency. He was almost in tears at having to claim benefits, and I can relate to that: I claimed benefits myself for a few months in the mid-’80s when I was left with a young daughter, and it has left an indelible mark on me. I know what it feels like to go and sign on—it hurts, it really does.

Those in work who are struggling to make ends meet and those out of work who are desperate to find it are the people who are bearing the brunt of the Government’s failed economic policies, not the high earners and millionaires who are getting a tax cut of £107,000 this April. It is not fair, and it is not right, and I am proud to vote against the Bill and defend the 8,100 people in my constituency who are claiming working tax credits.

17:20

[Julian Sturdy (York Outer) (Con)]

It is a great privilege to be called to speak in this sensitive and important debate. Any debate that focuses on our welfare system tends to provoke a great deal of passion, and it can be all too easy for politicians of all parties to fall into lazy arguments based on simplistic generalisations or preconceived ideas.

Our welfare system is a valuable part of our social fabric. Even a believer in a small state, like me, can believe that we should unquestionably support those in our society who fall on desperately hard times, either temporarily or permanently. For those who find themselves truly in need, support must be provided through our welfare system as a safety net for the most vulnerable.

However, the idea that our welfare system was sufficiently reliable or fair upon the formation of the coalition Government in 2010 is simply ludicrous. First, the system that we inherited was simply unaffordable, costing taxpayers more than £87 billion in 2010 alone. Such enormous outgoings must be reviewed and targeted for efficiencies. To suggest that a desire to reduce the cost of the welfare system is akin to not supporting vulnerable people is nonsense. In fact, I would argue that a shrinking welfare budget would be a key indicator of a successful welfare system.

That brings me to my second point which is about the wider welfare situation that we inherited in 2010. It was creating a culture of sheer dependency in certain parts of the system and contributing towards the dangerous social divide that my hon. Friend the Member for Keighley (Kris Hopkins) touched upon.

[Mr Ward]

I welcome the fact that you welcome a safety net. Do you not agree that unless you increase benefits by the rate of inflation, you are lowering that safety net?

[Julian Sturdy]

As you rightly said in your speech—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. There are too many uses of the word “you” for my liking. It is not about me.

[Julian Sturdy]

I apologise, Mr Deputy Speaker.

The safety net in the welfare state system is important, but I support the 1% uprating. The point was made earlier that if we are really to focus on the problem, we have to consider inflation as well. If we can keep inflation down through Government measures, as we are at the moment, that is an important part of the system.

An effective and fair welfare system should support those who tragically suffer from difficult medical conditions and those who find themselves in abject poverty. However, benefits that are simply rolled out and increased without question and without any regard for the wider economic situation threaten to give our whole welfare system a bad name. Thus our benefits must always be questioned, our welfare system always honed and the key question of fairness always addressed. The votes in the House later today must be made with fairness in mind—fairness to those who receive benefits and those whose taxes pay for them.

We cannot adequately or logically debate this issue without considering the fiscal implications of increasing benefits and the fairness of those implications. The key fact used by the Secretary of State—that over the past five years some benefits have increased by 20% while workers have experienced an average pay increase of 10% to 12%—is enough to set alarm bells ringing. If we are to ensure that our welfare system is a source of pride and not resentment, we cannot justify such increases when wider taxpayers are suffering in a tough economic climate.

[Charlotte Leslie (Bristol North West) (Con)]

Does my hon. Friend agree that this debate is essentially about two things—first, whether people on benefits should receive an income that rises faster than those who earn wages, and secondly, for those in work, whether it is better for the Government to take a lot of money and give it back in tax credits, or whether they should take less money in the first place and introduce tax cuts? I, together with most people in the country, believe it is better for the Government to take less money away, and thanks to this Government almost 2,000 people in Bristol North West have been taken out of tax altogether from April, and 40,000 people will get a tax break.

[Julian Sturdy]

I entirely agree with my hon. Friend; I will always believe that the Government should take less tax from people in the first place, rather than taking it and giving it back in some other form.

The welfare system—including benefits—is a delicate balancing act and by ignoring valid concerns about the system’s cost and efficiency we risk its future reputation and, by extension, its effectiveness. Capping benefit increases to 1% for the time being is a step of reason that will add to the Government’s wider package of welfare reforms to rebalance our welfare system for the benefit of claimants, while also helping to restore public confidence in the fairness of that system.

We should all remember and appreciate that decisions on such matters have a real impact on real lives. Nevertheless, to improve the fairness, efficiency and effectiveness of our welfare system for those most truly in need, I believe that the measures in the Bill are both necessary and justified. As in many areas of government, our tough decisions will not only reverse deficits and improve efficiencies but will save some of the public provision that the Opposition drove to the brink of bankruptcy when in office. I therefore urge all Members to support the Bill today.

17:27

[Mr Iain McKenzie (Inverclyde) (Lab)]

The Chancellor intends to take a further £6.7 billion from benefits and tax credits over the next four years by capping the increase in them at 1%. That is a real-terms cut and an additional squeeze on families, because of the Chancellor’s failure to create growth in our economy, and the delivery instead of a double-dip recession. The Government told us that they would bring down borrowing, but they are now borrowing an £212 billion more than planned. The Chancellor claims that he is cracking down on a benefits culture, but hard-working lower and middle-income working families are those hit hardest by the Bill. Many working families need tax credits and benefits to top up their incomes, as without them work really would not pay. Just 23% of the savings come from jobseeker’s allowance, employment and support allowance, and income support—the principal out-of-work benefits. The rest comes from tax credits such as maternity pay, sick pay and housing benefit, all of which are claimed by working people.

Some 60% of people affected by the changes to tax credits and benefits are in work, and one-earner working families could lose as much as £534 per year at a time when more than 6 million people in working households are already in poverty. Levels of long-term unemployment are worryingly high, because the Government have failed to kick-start the economy and their Work programme has failed. Even excluding the 60% of working people affected by the changes, this is hardly the time to start picking on the unemployed. The Government are always prepared to talk about skivers when unemployment is high and they are worried about costs, but never want to do so when job vacancies are relatively numerous and unemployment is low. Surely, if the Government wanted to inconvenience so-called skivers, this is not the time to target them, when large numbers of people are without work and reliant on benefits.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Does the hon. Gentleman agree that the reform will make it more difficult to kick-start the economy? It will remove millions if not billions of pounds from communities up and down the UK, making it harder for people to spend and therefore kick-start the economy.

[Mr McKenzie]

I could not agree more with the hon. Gentleman. The Bill will take many millions out of local economies and have a double kick on the downturn.

Incredibly, the Government take from struggling households and give to millionaires. As I have said, at the same time as the Government are giving tax cuts to millionaires—as we have heard, some cuts are in the region of more than £2,000 per week—the Bill effectively means a permanent reduction in benefits, which could have a devastating effect when a proper safety net is desperately needed by millions of the most vulnerable people in Britain.

It is highly likely that this regressive change will lead to an increase in poverty, especially for those who are already facing a perfect storm of cuts to public services and rising prices. Clearly, the Bill is an attack on hard-working families, who are paying the price for the Government’s economic failure. It is without doubt an attack on striving families. In my Inverclyde constituency, 6,300 families receive working tax credit. They are being asked to pay the price for the Government’s failure, while millionaires—believe it or not—get a tax cut.

In Inverclyde, the number of unemployment claimants means that 15 people chase every vacancy. The Government would suggest they use the Work programme. Where can I start with that? My constituents never hear from the Government where they can start work. The Work programme has delivered less than 1% in my area, which is a disgraceful and pitiful success rate.

The best way to reduce the cost of welfare is to get people back into work. The truth is that the Government’s failure on the economy is pushing the dole bill through the roof. That is why Labour propose real jobs for those who have been out of work for two years or more. Scotland stands to gain most from the introduction of the compulsory jobs guarantee. Long-term unemployment has been rising faster in Scotland than in any other part of the UK.

I shall conclude, because other hon. Members wish to speak in the debate. The welfare bill is going up under this Government—it is a staggering £13.6 billion higher than forecast—because they are failing to get Britain back to work. The Government need to practise fairness, but the Bill fails on fairness and on the economic tests, which is why I will support the amendment.

17:32

[Greg Mulholland (Leeds North West) (LD)]

Sometimes when I listen to debates in the House—on a number of subjects—I wonder whether the great British public are, frankly, astounded at the lack of acceptance of the genuine economic crisis facing this nation. The coalition Government exist only because of the situation we inherited back in 2010. Last year, we found out that the situation was worse and that it would take longer to get better. We had honesty from politicians—[Interruption.] The hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), the Parliamentary Private Secretary, says ludicrously from a sedentary position that we created the current situation, but the great British public know full well that it was the hon. Gentleman’s party and his previous Government who created it. What an absurd statement!

The simple reality is that the current situation means that there are very difficult decisions to take. The Bill is one of them. It is a serious matter, and there have been sensible, helpful and thoughtful contributions to the debate from Members on both sides of the House, but other speeches, frankly, have just scored party political points—[Interruption.] If the hon. Member for Dudley North (Ian Austin) wants to intervene, he is welcome to do so, but he should not chunter from a sedentary position.

[Mr McCann]

Will the hon. Gentleman give way?

[Greg Mulholland]

Of course.

[Hon. Members]

He will get more time.

[Mr McCann]

That is always a danger.

Will the hon. Gentleman confirm that, since the coalition’s election in 2010, the Government have increased borrowing by £212 billion more than they said they would?

[Greg Mulholland]

The hon. Gentleman is obviously not listening. I have said that it has been made clear that getting rid of that borrowing will take longer and be more challenging. However, let us also be clear that if Labour were in government, we would be like Greece. [Interruption.] Labour Members cannot apologise and they shout people down when things that are true are said. The reality is that difficult discussions had to be made when we found out last autumn that the situation was more difficult and that further cuts would have to be made over a longer period. That would be the reality whoever was in government.

[Guy Opperman (Hexham) (Con)]

Does the hon. Gentleman agree that this is about choices? Certain choices have to be made in what everybody accepts are very difficult circumstances. Nobody likes doing what we have to do today, but it is a job that we have to do if we are to sort this economy out.

[Greg Mulholland]

It is indeed about choices, and two parties are having to make those choices while the Labour party refuses to make any choices. Labour Members are saying nothing about what they would do or even telling us a single cut that they would reverse.

Ministers from the two parties have sat down and developed a reasonable strategy for reducing the welfare budget. I remind the House that it costs us more than £220 billion a year—more than we spend on health, education and defence combined. Labour Members conveniently forget that they went into the last election with a commitment to reduce that.

At the same time, the Liberal Democrats were clear that there were red lines that we would not cross. We clearly said that we would not accept getting rid of housing benefit for the under-25s; penalising people who have more children; a freeze on benefits; a reduction in benefits; or £10 billion in cuts. What we have now is a much smaller reduction in the budget, but one that is still significant and necessary. The solution is that everybody on benefits, apart, crucially, from those most vulnerable groups, as it is welcome that DLA, attendance allowance, disability carer and pension premiums in the ESA support group have been excluded and will continue to get benefits uprated by CPI—

[Ian Austin]

Will the hon. Gentleman give way?

[Greg Mulholland]

No. The hon. Gentleman has been extremely rude in this debate, and I have taken two interventions, so I am certainly not going to let him intervene. If he gets some manners, I might think about it on a future occasion.

It was a tough choice, but Ministers, to their credit, worked together in the interests of the country and came up with something that was as fair and reasonable as possible. I do not want to have to do this. I do not want to see any reduction in benefits unless absolutely necessary, but we need to remember that this is temporary. This is a temporary measure which can and will be reversed as and when the economy improves.

The one thing I would say to my right hon. Friend the Secretary of State is that we must get the language right. Talk of trying to divide those who work from those who do not has been unhelpful. On worklessness, as a former member of the Work and Pensions Committee in the last Parliament, I can tell the House that there was an appalling benefits trap under that Government, but they did not have the courage to address it. All members of the Committee said that again and again, and this Government are doing something about it. It is not easy and will not be done overnight, but the universal credit will ensure that people have a safety net and that work pays. That is why it is being introduced, and today’s changes also need to be seen in that context.

It was a Liberal who brought in the welfare state, and that is one of our proudest achievements. The principles in the Beveridge report were for a safety net to assist those who cannot work for whatever reason. If those principles were being breached today, I would not support the Bill, but they are not. Indeed, the level of benefits that we have will increase—admittedly not as much as we would like—and I hope that in the future we will review the situation. This is a tough choice, but it is one that I am prepared to make.

17:39

[Lisa Nandy (Wigan) (Lab)]

I do not have time to do justice to the appalling, grinding impact of this miserable piece of legislation on the 3,500 people I represent who are seeking work, including a number of people who until last year used to work for Remploy, when they were casually forced out of work by Ministers. I do not have enough time to do justice either to its impact on the 8,500 working families who will lose out as a result of the Bill, or the 40% of children across Greater Manchester who already go to school hungry. There was not one single reference to them in the autumn statement, and we have heard very little about them from Government Members today.

It is bad enough that, as food banks spring up across the country, the impact of the Bill will be felt by the children I represent. It is worse that the Government believe it is appropriate to label them and their families as shirkers and scroungers—to play the politics of division while at the same time failing to explain how jobseeker’s allowance claimants gaining 72p per week and millionaires gaining more than £2,000 per week could possibly be fair in anyone’s book.

In the past few days, it has become absolutely clear that the case for the Bill is based on a series of what I can only politely describe as false premises: that it is on the side of people in work, when, as the Resolution Foundation pointed out, two-thirds of the people who will be hit are in work; and that there is a culture of worklessness, which the Joseph Rowntree Foundation roundly disproved in its recent research.

[Ian Mearns]

One of the things that stuns me about the debate is the fact that 57% of children living in poverty actually have one parent who is in work. It is dreadful that Government Members discount that fact.

[Lisa Nandy]

I could not agree more with my hon. Friend. That brings me on to the third false premise that the Bill is based on: that there are two distinct groups, the working poor and the non-working poor, who can somehow be separated out and divided when, as we know and as the research proves, most of the people we are talking about are moving in and out of work at an alarming rate. Many of the people I represent work part-time on zero-hours contracts. They are agency workers and they are in insecure employment.

[Jeremy Corbyn (Islington North) (Lab)]

Is my hon. Friend aware that in inner-London constituencies such as mine, the housing benefit cap affects people in work and out of work, and that working families are being forced out of private rented accommodation? They cannot afford the rent anymore, because the cap has been imposed and does not meet their needs. This is an attack on the poorest people in the most vulnerable parts of the country.

[Lisa Nandy]

I am grateful to my hon. Friend for helping me to illustrate that point.

We have heard the myth, repeated over and over again today, that somehow the welfare bill is too high when, as my right hon. Friend the Member for South Shields (David Miliband) said, there is a big difference between attacking the evil of unemployment and attacking the unemployed. As the Child Poverty Action Group points out, in 1979 unemployment benefit was 22% of average earnings; today, it is just 15%. It has fallen sharply over that period.

We have also heard the myth over and over again that we can bring down the welfare bill by cutting benefits to the poorest. We know that that is not true, as does the Office for Budget Responsibility, which has forecast an extra £6 billion of welfare costs as unemployment tragically continues to rise in my constituency and across the country. There are two solutions that the Government urgently need to take seriously. If the Secretary of State would stop laughing and listen for just one moment, I would like to ask him to get serious about job creation. That is not just about wage subsidies, but looking at how we use our public procurement power to ensure that we get young people into apprenticeships, and people into work and decent training opportunities.

Secondly, I ask the Secretary of State to take seriously the impact of low pay on local economies. A number of hon. Members have raised this point. The more people there are taking cuts to their tax credits and take-home pay, the fewer people there are spending in local economies. In an area such as mine, where there is a high proportion of small businesses that employ many people from the local area, that is devastating.

The Bill fails every test. It is not fair. It will not work. It will have appalling consequences for the very poorest in society, whether they are in or out of work. All of us, every single one of us, in this Chamber has a minimum household income of more than £65,000. Many of us, particularly those sitting on the Government Front Bench, have a minimum household income of much, much more. For any of us to vote for the Bill today would be simply shameful, but what is more shameful is that, as part of the debate, some of us have managed to demonise the very people who most need and deserve support from their Government.

17:44

[Mr Marcus Jones (Nuneaton) (Con)]

Thank you for calling me to speak in this important debate, Mr Deputy Speaker. I have been here since the start and have heard a lot of rhetoric, particularly from Opposition Members. For me, this Bill and this debate are about striking a balance between the state providing a safety net for those who need that support and not putting the burden of any changes on to those least able to react to reductions in income, and taking into account the hard-pressed taxpayer.

I fully support the decision to retain the uprating of long-term disability benefits at the rate of inflation, as I support the triple-lock guarantee for the basic state pension. Those benefits are paid to groups that in general would find it impossible to increase their income, and it is right and proper that we fully protect them. That brings me to the people who will be mainly affected by the Bill. They broadly represent two groups in our community: those on out-of-work benefits and those receiving benefits in work.

I shall take the former first. No doubt, it is a terribly difficult decision to limit the increase to 1%, but, that said, unemployment benefits, by definition, should be a short-term safety net. The Government and Parliament should do all they can to get people back into work as quickly as possible. I know from my constituency that things are starting to work in that regard, and I am delighted now to see more bespoke help through Jobcentre Plus and the Work programme, and measures such as the enterprise allowance, the work experience programme, the Youth Contract and the push on apprenticeships are all starting to make a difference. Couple that with the universal credit, and 3.1 million people will benefit from increased support for getting into work. That will make a huge difference.

I turn to those affected who are in work. Again, in an ideal world it would be fantastic to uprate working benefits in line with inflation, but in the world of inevitable reality we all know that that is unsustainable. The creation of the tax credit system unleashed a bureaucratic leviathan on the country, and billions have now been spent on bureaucracy: £4 billion has been written off in errors and bad debts already and, as we heard today, another £4 million is likely to go the same way. It is far simpler to put people in a position where they pay less income tax, and I am glad and proud that the Government are doing that. Personally, I would like to see that extended, so that we can continue to move away from that bureaucracy.

The deficit, which is the most important issue facing the country, has to be dealt with in a way that is fair to the taxpayer. There is no doubt that difficult decisions have to be made to deal with it, and I am mindful that many people’s wages have been frozen, uprated at below inflation or even cut. We need to acknowledge that the taxpayer cannot bear the burden indefinitely.

[Christopher Pincher (Tamworth) (Con)]

My hon. Friend is right to say that taxpayers cannot continue to bear the burden. Does he agree that the 258% increase in tax credit spend between 2003 and 2010 was unsustainable?

[Mr Jones]

I thank my hon. Friend for his comment. He is absolutely right that we are in a difficult position that we can no longer sustain.

That brings me on to another point. This afternoon, I have observed a certain mood among the Opposition. Far from being pragmatic, they have been completely ideological. What puzzles me is that before the last general election Labour pledged to cut spending roughly in line with the coalition’s current rate of deficit reduction, but since then they have opposed virtually all the cuts, including £80 billion of savings proposed to welfare. The question for the Opposition, therefore, is: if all those changes are unacceptable, what do you propose to do? Do you want to cut the NHS? Do you want to make more cuts to policing? Do you want to cut local government? Do you want to cut education?

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I do not want to do any of those things. Will the hon. Gentleman please use the third person?

[Mr Jones]

I apologise, Mr Deputy Speaker. I was referring to Opposition Members, whose other options might be to put 13p on a litre of fuel, increase council tax, impose other tax rises or—as has always been the case—give the country more debt.

[Nick de Bois]

Does my hon. Friend agree that it is time for the Opposition to set out their full deficit reduction plan, as specified by Labour’s previous Chancellor?

[Mr Jones]

I thank my hon. Friend for his comments because they bring me neatly on to my next point. I suspect that today we will hear nothing from those on the Opposition Front Bench about what they will do. As with the rest of the measures that they have opposed, the Opposition will not reverse the measures put forward today, even if this country should have the misfortune of having another Labour Government. I look forward to, I hope, receiving answers from those on the Opposition Front Bench, but I fear that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) will be completely silent on that point.

To conclude, I will go through the Lobby this evening mindful of the fact that I am making an extremely important and difficult decision for many of my constituents. In the absence of a credible plan being put forward by any other party in this House—that is particularly true of the alternative being put forward this evening—I will be backing the Bill’s Second Reading and supporting the Government.

17:49

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

Let me start by doing my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) a favour and correcting the hon. Member for Leeds North West (Greg Mulholland). It was a Labour Government who introduced the welfare state, not a Liberal Government—I am damn sure there was not a Liberal Government after the war.

I heard the Secretary of State defending the Bill on Radio 5 Live this morning. He made two important comments. The first was that the Government had underestimated the size and scale of the economic problems the country faces; the second was that the proposal to cap benefits was based on fairness. The two issues are, of course, inextricably linked, but what he failed to mention was his Government’s contribution to the size and scale of the economic problems we face. Without that part of the story it is difficult—indeed impossible—to put into context the proposal before us, nor is it possible to understand the rationale that the Government are setting out.

The economy is not in good shape, but if the Prime Minister was too weak to move the Secretary of State from office in the last Cabinet reshuffle, he is certainly not going to move his Bullingdon club buddy. That is a pity, because it is the Chancellor’s quick-fix agenda of raising taxes and cutting spending too far and too fast that has spectacularly backfired on our economy. Because the benefits bill is going up while tax revenues are down, borrowing continues to rise. [Interruption.] The Secretary of State should listen to this; he might learn something.

We hear a lot about the great work that the Government have done to reduce the structural deficit, but very rarely do we hear anything about the debt. A perfunctory look at the numbers tells us why. The Government claim they have clipped the structural deficit by £37.5 billion, but they have also increased borrowing by £212 billion since they were elected. It seems neither appropriate, reasonable nor sane to claim that we have reduced the household budget— to use the litmus test of Mrs Thatcher, the great saviour of the Conservative party—while simultaneously borrowing more than five times as much as we claim to have saved. Like so many other claims that the coalition parties make, it is spurious. Their economic competence is indeed questionable.

All this is important because if we had steered a different and more sensible course, the economic condition of our country would be immeasurably better. That takes us back to the Bill. Who is being asked to pay as a result of the Government’s mishandling of the economy? We all agree that it would be foolish to disagree or take sides on arithmetic, but it appears that the Government wish to do so. May I remind hon. Members that jobseeker’s allowance is £71 a week? Under the proposal in this Bill, it will increase by 71p this year. It might interest the House to know that since this Government took office, the cost of the average weekly shopping basket has risen by 17%. Most importantly for the poorest people in our country, figures from the Department for Environment, Food and Rural Affairs show that falling income and rising food prices reduce food affordability by 20%. For the record—I draw this to the Secretary of State’s attention—the proliferation of food banks across the UK is not a cause for celebration.

Increases in prices have the ability, or at least the potential, to be absorbed by a working household’s budget. Although Labour Members do not deny that times are tough for everybody under the current economic circumstances, to suggest that there is a level playing field between someone earning even the minimum wage and someone receiving £71 a week in benefits is an utter fallacy. This is not about fairness; otherwise, 8,000 millionaires would not be getting a tax cut of £107,000 a year. The Secretary of State’s halo has fallen and crashed to the floor, and the Bill is sadly another example of the true character of Conservative politics. In difficult times, they see nothing wrong in helping the rich at the expense of the country’s poorest people.

17:54

[Mr Stewart Jackson (Peterborough) (Con)]

I do not criticise Labour Members for their aspirations. There is nothing ignoble in the positions that they are taking; I just happen to believe that they are wrong. They know that the picture of despair and hopelessness that my right hon. Friend the Secretary of State saw in Easterhouse in 2002 was the same picture that the right hon. Member for Birkenhead (Mr Field) saw in 1997, when there was an historic opportunity for the then Labour Government to tackle welfare dependency and rebalance work and welfare. Unfortunately, they did not take that action.

People out there are decent; they care and their attitude is, “There but for the grace of God go I.” They do not want to stigmatise people, and nor do Government Members. I accept that there has been some rhetoric on both sides of the House, but people do care. They also care about the dependency culture, and about fairness. In all honesty, they feel that the previous Labour Government tested their patience on this issue.

It is disingenuous to talk about cruelty. I think that it was cruel to park 1,000 of my constituents on invalidity or incapacity benefit for more than 10 years without the opportunity—[Interruption.] I should remind Labour Members that this was in 2010. Those people were given no opportunity to inform anyone of their needs. People suffering from depression or other mental health problems, and people with physical afflictions, were simply parked and forgotten. I am not saying that the Labour Government did that because they were cruel or heartless; they did it because they were incompetent. We are taking the tough decisions that will make work pay, through the Work programme and through apprenticeships that will tackle youth unemployment, which the previous Government doubled. Work is the No. 1 determinant in taking people out of poverty and breaking the cycle of children seeing their parents unemployed, living in a half-life of hopelessness and poverty and lacking ambition. That has been demonstrated across the world.

[Christopher Pincher]

My hon. Friend is quite right to say that work provides the best way out of poverty. Does he agree that the 5.2 million people who were trapped in dependency when the economy was growing in the boom years under Labour are evidence of the previous Government’s structural failure to deal with poverty?

[Mr Jackson]

My hon. Friend is absolutely right. In retrospect, I think that it was a tragedy to import thousands of low-wage, low-skilled people from eastern Europe while we parked our own indigenous young people who needed skills and training and who needed educators and businesses to put their the faith and trust in them. I have nothing against the people who wanted to come to this country to make a better life for themselves and their families, but at what cost did they do so? Even the Scottish Trades Union Congress says the same thing.

Some of the arguments being used are disingenuous because they do not fully understand the context. We have uprated benefits by 5.2%, we have brought in apprenticeships, and we are trying to deal with these issues through the Work programme. I am on the Public Accounts Committee and I know that the programme is not perfect. We are at the beginning of a process and there are some difficulties with appeals, with people’s understanding of the system, and with advocacy. I understand that. However, my blue-collar constituents do not understand how it can be right, when their average salary is about £24,000, for a party that aspires to government to say that it will not countenance a benefit cap of £26,000. My constituency has some of the poorest super-output areas and wards in the eastern region, and my constituents are decent, salt-of-the-earth people who want to work. They are not shirkers.

[Mr MacNeil]

rose—

[Mr Jackson]

I will not give way to the hon. Gentleman, even though he is a terribly charming fellow.

Those people in my constituency want to work, but they want the Government to give them a positive message about the future. It is cruel to park people and to forget them.

[James Wharton (Stockton South) (Con)]

I want to back up what my hon. Friend is saying. When I went around my constituency at the last election, the issue of making work pay came up time and again, and the communities in which it came up were the poorest ones. They had seen the damage that long-term welfare dependency could do to a community. The reason that my hon. Friend and I welcome the reforms is that the Government are finally tackling this long-term problem, which hits the poorest in our country the hardest.

[Mr Jackson]

That was eloquently put by my hon. Friend, who is even younger and better looking than the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). We take a pinch of salt for a party that has no coherent fiscal alternative. Frankly, “Tough on Coco Pops and tough on the causes of Coco Pops” does not make a fiscal policy. The 10p tax rate was a debacle, while re-spending over and over again bankers’ bonuses and pensions credit does not cut the mustard.

Let me give some free advice to Labour Members. We did the same as them in 1998 and 1999 when we said that the downturn was made in Downing street, but it did not help us because we were not seen as credible. I respectfully invite Labour Members, if they are going to vote against Second Reading, to say what they would cut and what they would spend as an alternative. The Bill will save the best part of £2 billion. Politics is about choices, as Aneurin Bevan said 50-odd years ago, and he was right. It is disingenuous to keep repeating the issue of tax cuts to millionaires, when we have taken millions of people out of tax and cut the taxes of many low-paid working people. This Bill is about giving a message—that work pays and that it is better than welfare. We should give people the life they need and deserve—a life of work and a better future.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Will everyone resume their seats? We can see that no Government Members wish to contribute, so if everyone shows the time discipline of remaining within three minutes, all those who wish to speak will be able to contribute to the debate. Let us have some team play.

18:01

[Mr Kevin Barron (Rother Valley) (Lab)]

First, I am sorry to see that the hon. Member for Brent Central (Sarah Teather) is no longer in her place, as she made a very good speech. She mentioned one word that applies to much of the debate when she spoke about the use of “language”, while another important word, spoken about by the hon. Member for Nuneaton (Mr Jones), who is now leaving, is “ideology”. Language and ideology have surrounded this debate for many years.

In the last 12 months, we have noticed the language used by the coalition to get us to where we are today. Twelve months ago last January, the Deputy Prime Minister was talking about “alarm clock Britain”, and then we had talk about people “behind the curtains”. On 8 October last year on the “Today” programme, the Chancellor of the Exchequer said it was

“unfair that people listening to this programme going out to work see the neighbour next door with the blinds down because they are on benefits”.

My blinds used to be down because I was on night shift, and for many people the blinds and curtains are closed in the morning because they are working hard throughout the night, seven of 24 hours every day to keep industry running. Many people will resent what has been said.

This is not the first time that such language has been used. Andrew Rawnsley, a political columnist for whom I have a lot of time, got it right in an article in The Observer this Sunday, when he said that in view of the true intent of the author of the Bill—I assume he meant the Chancellor of the Exchequer—it should be called

“the Welfare (Make Labour Look Like the Party for Skiving Fat Slobs) bill”.

It is a pity that the hon. Member for Cannock Chase (Mr Burley) is not in his place as that description fits well with his anonymous quotes about people being at home because that is what they want to do and because they do not want to go out to work. That is not my experience in life, and I have been a Member of this House a long time. I started work as one of six children in a coalmining community. I lived in that community for most of my life, and I can say that the people I know and have represented for years are not like the caricatures that have been portrayed in this debate for far too long.

Andrew Rawnsley went on in his article to say the real truth:

“The majority of those who are going to lose—about 60%—are people in work, among them 3.7 million people on child tax credit and 2.5 million on working tax credit…those hit will include primary school teachers, nurses and army officers”.

As he went on to say, they are

“not exactly the ‘shirkers’ and ‘scroungers’ of some Tory rhetoric about benefits.”

The Government are trying to play politics with the welfare state, but their claims are clearly unravelling. It is no wonder that the Government have run out of speakers—and come the next general election, some Government Members will deeply regret the speeches that they have made today.

The Citizens Advice Bureau works with these people week in, week out, giving them advice, and it works with us as well, certainly in my part of the world. According to the brief that it sent to us:

“A couple with two children earning £26,000 a year and paying a fairly modest rent of £130 a week… will experience a net loss of £1.85 a week from next April, £6.52 the following April and £11.20 in April 2015. A possible rise in the personal tax allowance to £10,000 in perhaps April 2014 would only give them £0.75 a week to offset the loss of £6.52.”

[Mr MacNeil]

Will the right hon. Gentleman give way?

[Mr Barron]

No, I will not. Other Members wish to speak.

As was pointed out by my hon. Friend the Member for Aberdeen South (Dame Anne Begg), this is the first time that we have sat here and not had one debate about one annual uprating of benefits. That is because this uprating is so unpopular. It has been driven by a nasty party, and by a nasty piece of legislation which I will oppose.

18:05

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I am sorry that we are so pressed for time, because these are issues of real public interest, and I think that they deserve more scrutiny than we are able to give them this evening.

I believe that the 1% cap on the uprating of working-age benefits is an inherently regressive measure. It will make people on low incomes even poorer, will increase deprivation, and will widen the gap between the haves and the have-nots in our communities. It will particularly hit parents in low-paid or part-time work who are already struggling to make ends meet because of the wider economic climate.

I shall oppose the Bill’s Second Reading. Labour’s amendment proposes that the House should decline it a Second Reading, and posits a guaranteed job offer for those who have been out of work for a long time. On the basis that that is a laudable aim, I am prepared to support it, albeit with a caveat. I have listened carefully to the debate, but I have heard no details of how such a proposal could be put into effect in any realistic way. I would not want to endorse any particular scheme until I had seen whether it was workable and fundable in practice.

The Bill will hit those who are working, especially those who are supporting and bringing up children, especially hard. Many people in lower-paid private sector jobs have seen their hours cut recently, and many who are working part-time want to work full-time but cannot find full-time jobs or pick up extra hours. Meanwhile, they are struggling to juggle work with child care.

As others have said, notably the hon. Member for Brent Central (Sarah Teather), we all need to take responsibility for the way in which we portray people who are unemployed. We need to recognise that those who are jobless should not necessarily be blamed for their joblessness, and that the rises and falls in unemployment are caused by wider economic factors more than by individuals’ aspirations. We also need to recognise that the greater part of the savings made here will be taken from people who are working, often in very physically demanding and fairly unrewarding jobs.

Like the right hon. Member for Rother Valley (Mr Barron), I was struck by the comments of the Citizens Advice Bureau on the impact assessment. We had seen no impact assessment until this afternoon, and we have still seen no equality impact assessment. According to the CAB’s calculations, a family consisting of two full-time workers earning the minimum wage with two children, living in private rented accommodation, will be losing £12 a week by 2015. Disabled lone parents will suffer, as will families with a single earner. What those examples mask, however, is the disproportionate impact of the rising cost of living on households with very low incomes. The worst of the cold winter weather is probably still ahead of us, but the rises in domestic fuel bills will cause a very nasty hangover in the spring.

[Christopher Pincher]

Will the hon. Lady give way?

[Dr Whiteford]

I will give way briefly.

[Christopher Pincher]

The hon. Lady talks of the impact on low-income families. Is she aware that, as a result of the Chancellor’s autumn statement last year, some 1,400 people in her constituency are being taken out of tax, and 30,000-odd are better off in tax?

[Dr Whiteford]

I am delighted to be able to respond to that point. What has been shown by the monitoring of the Citizens Advice Bureau and the Institute for Fiscal Studies, and by the Government’s own impact assessment—which we received very belatedly—is that the combination of the tax and benefit changes will hit the lowest deciles of the income spectrum much harder than the middle and upper deciles. The lowest five deciles are hit hardest, and within that the lowest three are hit worst of all. Many of those are hard-working people and they deserve more. We have heard much criticism of the tax credit system this afternoon, but the Government have failed to address the reason why we need a tax system when people who are working full-time in demanding jobs cannot afford to bring up their children without depending on extra support from the state. That is the underlying issue, and until we have heard how the Government plan to address poverty for working people, we should not even be talking about a below-inflation rise in benefits.

The other issue that should be taken into account, which has been raised by other Members, is that food prices are rising. That is to do with the bad harvest that we have had here due to the very wet summer but, more importantly at a global level, bad harvests in the US and Russia have put the prices of basic commodities way up. In the past year potatoes, probably the great staple of our own food economy, have gone up in price by more than 40%. That is having a disproportionate impact on very poor people, compared to people like us. A 1% increase in an MP’s salary would give us an extra £600 a year. The increase of 71p or 72p for a jobseeker does not compare. There is a quantitative, material difference.

The cap means that there would be a 4% cumulative cut in support to low and middle income families, which will increase material deprivation. The Government have got their priorities all wrong. Asking low and middle income families to bear the brunt of cuts while insulating the very richest is the wrong choice to make, and I look forward to the day when in Scotland we can make these decisions for ourselves.

18:11

[Albert Owen (Ynys Môn) (Lab)]

The Chancellor’s statement last autumn was an admission that the Government were failing in their economic policy. They had failed on their two fiscal targets and they now say that they will need two Parliaments to meet those targets. The Chancellor needs to divert attention from his economic policy and is doing so by the crudest of politics. The Bill is a wedge between one party and another for electoral advantage. It hits the low paid, the unemployed, of whom there are 2.5 million, and the under-employed—many, many people on low wages, decent, hard-working people, including nurses, primary school teachers and armed forces personnel—and to play politics with them through the Bill is wrong.

Part-time workers need help and support, yes, and I would support a reform that helps them, but to penalise them at this time is completely and utterly wrong. The Chancellor is not known for his consistency. In his autumn statement in 2011 he said:

“I also want to protect . . . those who, through no fault of their own, have lost jobs and are trying to find work”.—[Official Report, 29 November 2011; Vol. 536, c. 802.]

Those are the very people who, 12 months later, he is going to hit hardest.

I can understand some of those on the Conservative Benches thinking that the wedge is very clever, but I cannot understand the Liberal Democrats supporting it. There are not many of them—

[John Hemming (Birmingham, Yardley) (LD)]

rose—

[Albert Owen]

I will not take an intervention as the hon. Gentleman has not been here throughout and there are not many of his colleagues here today.

My constituency suffered from high unemployment in the 1930s, the 1980s and the 1990s—mass unemployment in the 1930s. My constituency has a strong Liberal tradition. Megan Lloyd-George, one of my predecessors, refused promotion in the coalition Government because she wanted to stand up for the unemployed, the under-employed and the low paid, and she wanted to support the welfare state. Breaking the link today between the increase and inflation is in many ways a treacherous act for a Liberal.

[John Hemming]

rose—

[Albert Owen]

I will not give way to the hon. Gentleman for the reasons that I gave and the limitations. Had he been here at the beginning, he would have heard many of the arguments.

The Liberal Democrats have a lack of conviction, but they can make up for that. I know that some honourable ones will, and will vote for the amendment tonight and against Second Reading, because the Bill is completely wrong. There was no need for a Bill. The change could have been made as it has been in the past, but it was chosen for political theatre. After losing Corby, the Government in desperation went to Crosby, and Crosby introduced the wedge. The crudest of Australian politics has been imported to the United Kingdom.

Too many of my constituents—decent, honest, hard-working people—will see their benefits cut if the Bill goes through tonight. I appeal to the Liberal Democrats and those decent Conservatives who genuinely care about the underemployed, the unemployed and the low paid to join us by voting for the amendment and against a Second Reading and standing up—I make no apologies for this—for the decent, honest, hard-working people, the low-paid, the unemployed and the under-employed, who are under attack from this Government measure.

18:14

[Angela Smith (Penistone and Stocksbridge) (Lab)]

The Bill represents an unprecedented break with the principles underpinning the social contract that has characterised British society in the post-war period. No other Government—not even the Thatcher Government—have broken with the uprating principle to the degree that this Government have done so, and for very good reasons, because the loss of income incurred over time merely stores up problems for the future.

Earlier today my right hon. Friend the Member for South Shields (David Miliband) outlined the case for genuine welfare reform, on the basis that economic and demographic changes make such reform vital. I argue that at the heart of the debate is the need to look again at how we get people back into work. Labour’s job guarantee for the young and the long-term unemployed would be a good start on the road to proper, meaningful welfare reform, whereas the Government’s proposals, as laid out in the Bill, do not represent reform. Rather, they represent an old-fashioned attack on the victims of the Government’s double-dip recession: the low-paid and their children.

The attack on the jobless and the low-paid is simple to explain. In the context of the welfare changes already announced, which will take £18 billion out of the welfare budget for the working-age population, the 1% freeze represents an appalling but audacious decision on the part of the Con-Dem coalition to force those on the lowest incomes to pay the cost of the Government’s failure to inject demand into the economy, with borrowing going up and austerity measures being extended well beyond 2015. While £3.4 billion is given away as a tax cut to millionaires, the very lowest paid in society are being asked to pay for the Government’s economic failures. Even worse, it is those in work who will bear the greatest impact of the freeze inscribed in the Bill. According to the IFS, as we have heard many times today, 68% of those affected by the decision will be in work.

Yesterday we heard the Deputy Prime Minister—a Liberal MP—excuse his support for what is clearly an unfair and vicious attack on those who are least able to pay the price for economic incompetence by claiming that there is no alternative. The truth is that these savings, which amount to £3.7 billion, must be seen in the context of the £3.4 billion give-away to the very richest in society. On top of that, we all know that there is only one sure way of getting the deficit down in the long term: getting the economy growing again and getting people back into work.

The real victims of today’s measure are, of course, children—blameless children who will feel the impact of squeezed budgets. Many already know what it is like to see their parents fall back on food banks to keep them fed. Children are primarily the responsibility of those who bring them into the world, their parents, but we understand that society, too, has a responsibility towards them. After all, the young are our future. Society needs to nurture that future, invest in it and give it the best possible chance of delivering the prosperity we all need.

I will draw my remarks to a conclusion with one further point. The Government think that they are clever in the way they are shaping their savings profile. They think that they will escape the consequences of what they are doing because the jobless, the low-paid and the young vote in lower numbers than we all wish to see. The Government should think again, because that will not necessarily prove to be the case in 2015.

18:18

[Nic Dakin (Scunthorpe) (Lab)]

Hardly a week goes by without an individual or couple coming to my surgery, rather downcast, and saying something like, “You know, I’m very happy that we’re cracking down on scroungers, because it needs to be sorted out.” Then they pause and say, “But look what’s happened to me.” They might have lost their job at Lloyds TSB, Tata or Kimberly-Clark. They will say, “I’m out of work for the first time, so am I really supposed to work for such little money?” They might have the threat of the bedroom tax to pay and might be worried about where they will find the money. That demonstrates that in the same individuals can be the rhetoric and the reality. They can swallow the rhetoric of the right-wing press—some of which some Government Members, to their shame, have reiterated this afternoon—while understanding when the reality hits what the reality is.

The fact is that 60% of those affected by the cut in support that will take place if the Bill is voted through are people in work. As the Children’s Society has demonstrated, nearly 12 million adults with children and 11.5 million children will be affected by the proposal. Parents affected include 300,000 nurses, 150,000 primary school teachers and 40,000 armed services personnel.

The Bill and the rhetoric used by some on the Government Benches—to their credit, not by all—is designed to break the cross-party consensus that has existed since the Beveridge report. That consensus said that we were a society that looked after people in their hour of need and supported people through the bad times; that we were one nation who supported each other. It is not surprising, therefore, that some in the party of Beveridge are deeply unhappy at the tone and substance of the debate. I pay tribute to the contributions made by the hon. Members for Bradford East (Mr Ward) and for Brent Central (Sarah Teather).

Barnardo’s has pointed to the impact that the Bill will have on children:

“This policy will punish children the most by trapping them in poverty and impacting on their lives, leading to poor health, poor qualifications and unemployment.”

That is the risk we take if we go ahead.

Finally, the policy is not only unfair but economically inept. As many have pointed out, people on the lowest incomes spend their money in local economies, and the last thing that we need is a further contraction in demand in local economies. We need a virtuous circle of a one-nation United Kingdom, which will be created if we deliver the compulsory jobs guarantee proposed in the Labour amendment. I will be proud to be supporting the 7,700 people on tax credits in my constituency by voting against what my right hon. Friend the Member for South Shields (David Miliband) rightly dubbed “this rancid Bill”.

18:22

[Julie Hilling (Bolton West) (Lab)]

How can it be that we are the seventh richest nation in the world but our children are getting rickets? How is it possible that in our rich nation 13 million people live below the poverty line—or that 200,000 people had to go to food banks last year, or that the poor have to make a choice between heating and eating, or that children are going to school hungry?

The reason is that this rotten, heartless Government have given a tax cut to millionaires but with this Bill make the poor suffer even more. They have the cheek to label the 2.5 million people who are desperate for work as “shirkers”. How dare they?

Do the Government want to tell Allan, who was working for an agency that gradually reduced his hours to the point where he lost his home—he is now sofa-surfing—that he is a shirker? What about Nicola, who lost her tax credits while she was on maternity leave, or 59-year-old Patricia who, having worked all her life, has become unemployed due to an injury and already cannot heat her house? What about Stephen, who has just got custody of his three boys aged under seven and has had to give up his job as a chef because he could not get care for the children at night? What about Peter, who was about to set up home with his girlfriend until he lost his job three weeks before Christmas?

Government Members do not have a clue. What would they like to say to my neighbour Leah, a single mum of two working 16 hours a week on the minimum wage? She uses her £101 a week wages to pay her rent, utilities, council tax and other household bills. She uses her tax credits to buy food, clothes, school dinners and her £18-a-week bus fares. What will she cut out when her money will not cover her basics? Should she beg for food at a food bank, stop her children from going swimming, stop heating the house or do what so many other parents have to do at the moment—skip meals just so that she can feed the children?

Sixty-eight per cent. of the people hit by this Bill are, like Leah, in work. They are nurses, soldiers, shop workers, cleaners, teachers, admin workers and care workers. Many are already struggling to make ends meet, and this will put them over the edge. What about the others who are affected—carers and the disabled, and people desperate for work? Government Members should be ashamed of themselves.

This policy is also going to harm the economy. The IMF has already warned the Government that their annual cut of £24 billion to benefits and tax credits will reduce economic output by up to £40 billion. Not only are they heartless; they are incompetent too. The way to get down the benefits bill is to get people into decently paid work. By already having a double-dip recession and heading for a triple dip, the Government have demonstrated that we cannot cut our way out of a recession—we have to grow our way out. Punishing the poor and bringing them to desperation will not grow the economy; it will simply make it worse.

The Government boast that they are creating jobs but fail to tell us how many of those jobs are unpaid, because unbelievably they are including unpaid workfare placements in the figure for jobs created. They are silent on the number of those jobs that are under 16 hours a week, and they do not tell us how many of these so-called new jobs are really public sector jobs that are simply being transferred to the private sector.

Yes, the Government need to get a grip on the economy, but not by driving the disabled to suicide and the poor to despair. They need to take action to grow the economy, not starve the poor. This Bill is a disgrace and I will be proud to vote against it and stand up for my constituents, both in work and out, who need a system that will support them and their families in good times and bad.

18:26

[Nia Griffith (Llanelli) (Lab)]

I object to the Government’s proposals to limit to 1% for the next three years any rise in income-maintenance benefits to low-income households, over 68% of which go to households in work, not households out of work. It is grossly unfair, hits the poorest hardest and will cause genuine hardship; it makes no economic sense whatsoever. Making real-terms cuts to low-income families will have a disastrous effect on local economies. People on low incomes and families who are struggling to make ends meet immediately, through necessity, spend what money they have and any increase they receive on basic essentials, putting that money back into the local economy. They have no choice about that. Low-income families have already been disproportionately badly hit because of rising food and fuel prices. Implementing these real-terms cuts will suck money out of the local economy, leading to more difficulties for local businesses, more shops on our high streets closing, and more job losses. This will particularly affect economically depressed areas where it is already hard to find another job, and more people unemployed means more people needing to claim benefits.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend makes an important point about jobs. The benefits bill is rising because of this Government’s failure on the economy and jobs. Does she agree that the Welsh Labour Government are showing the way with their Jobs Growth Wales fund, which is already ahead of target, in stark contrast to the failure of the Work programme, which has seen only two in 100 people put into work?

[Nia Griffith]

Indeed. What the Welsh Government are doing is absolute proof that we mean business in our motion and in saying that we need to create opportunities and make sure that people get back to work. The great thing about the Welsh Government’s programme is that they have been targeting private sector jobs having previously concentrated on public sector jobs. That is making a huge difference to the people who are able to take part.

The Bill will suck more money out of the economy. For example, House of Commons Library figures show that over the next three years the Government’s economic decisions will mean cuts in welfare benefits taking some £3.6 billion out of Wales. If we also add in the £2.4 billion in extra VAT that people will be paying, that amounts to a massive £7 billion coming out of the Welsh economy during this Government’s term of office. That is no way to foster economic growth.

It is a complete myth that people receive massive, generous amounts. Comparisons with actual living costs have consistently shown that what people receive is not generous to start with, but over the years there has at least been a recognition by Governments of all colours that allowances should be regularly upgraded to reflect inflation. As my right hon. Friend the Member for Rother Valley (Mr Barron) said, a decision to limit increases in the rate of income-maintenance benefits to below inflation for a sustained period is historically unprecedented. At a time when benefit allowances are down as a percentage of full-time earnings and prices of essential items are rising, this will lead to increased hardship and increased child poverty. House of Commons Library research shows that, as a result of these proposals, the real value of benefits and their value as a percentage of average full-time earnings will fall.

Much has been made by the Lib Dems of the raising of the personal tax threshold, but in reality this is a regressive measure. An analysis by Citizens Advice and the Resolution Foundation shows that the impact of capping benefits and tax credits will wipe out any gains from the increase in the personal tax allowance for those on low incomes—precisely the people it is meant to help.

I received a distressing letter recently from a woman who has been diagnosed with cancer that will require extensive surgery and follow-up treatment. She has been alarmed to discover the amount that she is expected to live on as statutory sick pay. She has worked all her life and made contributions. She has enough to cope with without having to worry about money. This Government’s Bill will make matters far worse for people such as her. To make a real-terms cut to statutory sick pay for one year, never mind three years, is an absolute disgrace.

This Bill will not help people on low incomes—in fact, it will make life extremely difficult for them—and neither will it help to get the economy going. What we really need is real growth strategy to get the economy going, and then we can talk about paying back the deficit.

18:30

[Mark Durkan (Foyle) (SDLP)]

It is pantomime season and during much of today’s debate we have heard a lot of caricature, exaggeration and hyperbole, particularly from Government Members, with the honourable exceptions of the hon. Members for Brent Central (Sarah Teather) and for Bradford East (Mr Ward).

I have sat throughout the whole debate and listened to insidious arguments in favour of this invidious Bill. It is a completely unnecessary Bill, a political contrivance. The Government are engaged in a classic act of misdirection. They are telling some of our people, “We are giving you the confection of increased personal allowances and taking you out of taxation,” and, “We are going to hit the spongers and confiscate from them,” but that is all designed to make sure that people do not realise that they will be hit with stealth cuts and stealth taxes. That is the plan and purpose of this Government. The theatre surrounding the Bill is part of that, which is why I am happy to oppose it. I am particularly glad that the official Opposition will also oppose its Second Reading, having many times found themselves boxed in by the fear of what the Daily Mail might say about some of this Government’s other measures.

The fact is that this Bill will not just hit the benefits of those people who are out of work through no fault of their own; it will also hit the circumstances and living standards of families who are working, struggling to work and who hope that they will still work, but do not know whether they will able to, as a result of this Bill. That is why it is so unfair.

The Bill is also unnecessary. I am not in denial about the scale of the deficit or any of the other hard choices that have to be made, but the idea that this is the measure that is needed now to deal with the deficit, and that it is absolutely necessary or in any way fair, is completely wrong. Nor do I believe the delusion accepted by the hon. Member for Leeds North West (Greg Mulholland) that this is a temporary measure. The Chancellor, who has inspired this Bill, has already said that he wants £10 billion-worth of cuts in welfare in the next spending review period and he will still look for those cuts.

It is only today that the Government have produced their impact assessment for a Bill with such major implications, even though all sorts of other foundations and think tanks, such as Citizens Advice, have been able to produce their impact appraisals sooner. The Government’s impact assessment tells us:

“The legislation is in place for two years after which the Secretary of State for Work and Pensions will review the up-rating of benefits annually in line with statutory requirements. In a similar way Government will consider the up-rating of Tax Credits and Child Benefit at appropriate fiscal events, Budgets, Autumn Statements etc.”

Just as we were given no notice of this Bill until the autumn statement, we should be under no illusions that there will not be a further grinding agenda if the Chancellor gets a mandate to get his way in the future. That is why the introduction of the Bill fundamentally changes things with regard to the commitments that we have all made to the social security system for all the reasons given by so many hon. Members.

I represent a constituency where enduring high unemployment is a chronic problem. For those who are in work, low pay and under-employment are too much a part of their experience. All those people will be hit. In a constituency such as mine, the problem is not a lack of work ethic, but a lack of work. A firm that opened recently interviewed 23 people for every job that it had. That is not a lack of work ethic. Those people who want jobs are being insulted by this Bill.

18:34

[Caroline Lucas (Brighton, Pavilion) (Green)]

The Bill is part of a war on the poor, waged largely by the very rich, who are deliberately doing all they can to divide individuals and set communities against each other. It is a reckless and dangerous measure that is likely to be massively counter-productive and to destabilise already struggling groups in society, pushing them into greater despair and desperation.

The Bill is not only hugely socially divisive, but is likely to be entirely counter-productive, even in the economic terms that the Government say are driving this set of policies. It will be counter-productive because as people are pushed into greater desperation, they are more likely to be forced to make greater calls on the state, for example as those who are struggling to pay rent are finally pushed into homelessness or as those who are struggling with mental disability or mental illness are finally tipped into greater ill health. It will be counter-productive because, as many hon. Members have said, if we want to get the economy moving again, the best way to do so is to put money into the pockets of the poorest, because they are the ones who will spend it in the local economy, not the very rich.

This is a mean and miserable Bill from a mean and miserable Government. I hope that it will be reversed at the first opportunity. I apologise if I have missed this, but I would love to hear a firm commitment from Labour that if it forms the next Government, it will reverse this Act, as it will then be.

I have been asking myself how this wretched Bill has got any currency at all. It is, of course, because of the deliberate lies, myths and misinformation that have surrounded it. There is the picture of the shirkers on benefits who have apparently enjoyed a lavish 20% income increase over the past five years. What a neatly seductive and simple picture that paints, but what a false and unfair one, particularly to the 2,136 jobseeker’s allowance claimants in my constituency, who come to me on a regular basis, desperately searching for work.

What does this lavish 20% increase mean in cash terms? I checked with the House of Commons Library. It means that in 2007, JSA was £59.15 a week and that five years later in 2012, it had gone up to just £71 a week. That is hardly a princely increase. The truth is that 20% of very little is still very, very little—but how useful it is to the Government to spin this attack on the poor! No wonder they never say what the 20% actually represents in cash terms.

Similarly, there is the 10% increase in average earnings for people who are in work. Again, the Government never say what that percentage means. For people on average earnings, that 10% increase means an increase in their weekly take-home pay of about £11 in each of the last five years. That is not enough and I oppose the public sector pay freezes, but it is still nearly four and a half times more in hard cash terms than the £2.50 annual increase for those on JSA.

It is therefore an outrageous and disingenuous attack on people who are seeking work to suggest that they are getting more than people who are in work when, in cash terms, they have got more than four times less. As the hon. Member for Brent Central (Sarah Teather) said so eloquently, it is cash terms, not percentages, that mean the most to ordinary people.

Getting tough on welfare is lazy, mean politics. It relies on misleading people and on conning the public into thinking that the system is more generous than it is and riddled with fraud. A poll commissioned by the TUC shows that, on average, people think that 27% of the welfare budget is claimed fraudulently. The Government’s figure is 0.7%. Instead of feeding those misconceptions, the Government should be challenging them. Instead of penalising the poor, the Government should be supporting them.

I say again that this is a mean, miserable Bill. I hope that Members will reject it and I hope that I hear from Labour that it will reverse the Act if it gets into government next time around.

18:39

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

A lot of figures have been bandied about, so I will start with a few. There have been 34 Back-Bench speakers, including 13 from the Government Benches, two of whom were critical of the Government; and the Government ran out of speakers an hour before the debate was due to finish. What message does that send to people who want to know what the Government’s plans are and what will happen to their benefits?

We have heard a number of powerful speeches and a number of others that I do not think were what people watching the debate would have wanted to hear. There have been so many speakers that I cannot list them all, but Opposition Members have been consistent in standing up for the people whom the Government have consistently let down.

Ahead of the debate, this was described as a watershed moment. Perhaps it has turned out to be one, but maybe not in the way that the Government expected. On the very day of their coalition relaunch, the former Minister with responsibility for children and families, the hon. Member for Brent Central (Sarah Teather), condemned the coalition’s policy on welfare, the Leader of the House of Lords resigned with an admission that he had criticisms of his coalition partners, and we heard that the Deputy Prime Minister is apparently not entirely comfortable with the coalition’s approach to welfare, but as ever he is going to go along with the policy anyway. On the back of a report showing that the Work programme has been worse than doing nothing, we hear that a senior Minister briefed that the much heralded universal credit plans are not just in disarray but a “disaster waiting to happen”. Far from a Ronseal relaunch, the Government have had to reach for the Polyfilla to try to plug the gaping cracks in their own ranks and in the coalition in general.

Let us talk about the Bill. We have been clear that we need to get the overall costs down, but we have heard that there are different ways to do that. There is the way that the Government propose, which we do not support, and there is the way that Labour proposes—getting people into work. Welfare spending is rising to pay for the costs of the Government’s failure on the economy. As we have heard time after time, the Bill will mean a real-terms cut in support for both people in work and those looking for work. It will mean a rise of 1%, while inflation is set to rise by between 2% and 3.7% over the same period.

The Chancellor, who I understand has not been able to make it back in time for the winding-up speeches, talked about the unfairness of those on benefits keeping their blinds down while others head out to work. Sadly, some Government Members—not all, to be fair—have used such language today. The Tories in particular have tried to continue the myth that the Bill will only hit people who are somehow slacking or skiving. As we have heard time and time again, the Library analysis shows that just 23% of the savings will come from out-of-work benefits. The harsh reality is that most will come from people in work and on the lowest incomes, whether from tax credits, child benefit, maternity pay or sick pay. It will come from the most vulnerable in our society—the people we should be protecting most.

We have heard about the research by the Joseph Rowntree Foundation which shows that more than 6 million people in working households are in poverty, while the Department’s own research shows that 60% of children living in poverty come from families in which at least one parent works. As the projections of the Institute for Fiscal Studies show, an extra 1 million children will be pushed into relative poverty by 2020 as a result of Government measures. Ministers ought to listen to that and take account of it, because that is all before we take into account the effect of the cuts that we are debating today.

The IFS figures confirm that all the measures announced in the autumn statement, including the rise in the personal allowance and the measures in the Bill, will mean that a one-earner family with children will be an average of £534 a year worse off by 2015. That might not seem much to some Government Members, or to the millionaires who will get a tax cut that will give them £2,000 a week while those who get jobseeker’s allowance will have an extra 71p and there will be an extra 20p on child benefit. However, as we have heard time after time from Opposition Members, for a family on a low income those few pounds every week make the difference between a nutritious meal on the table for the children and just a snack. It is the difference between a child being able to go to a club, after-school event or school outing, or keeping the heating on during the coldest days of the year.

The Chancellor’s view is of people who are out of work lying in bed with the blinds down, but many of those I know who are out of work are staffing charity shops, volunteering for food banks or helping out at the local youth centre. Those people would jump at the chance to have a job if there was one for them, and as we have heard, although they are unemployed at the moment, many have not always been so and may have moved in and out of work or had to reduce the number of hours worked during the week. Such people would take up the opportunities offered by our work guarantee scheme; they want to pay their way but need a job that will allow them to do so.

We are calling for an approach to welfare reform that focuses on getting people back into work. Some Members have asked what the Labour party would do were it in government, and we would look at the position of the economy at the time. We will, however, be tough and fair, and under our jobs guarantee scheme every adult who is long-term unemployed will get a job that will be paid at the minimum wage for at least six months. If a job exists, people have a responsibility to take it. Our scheme will be structured—this point is important for those who have asked about how it would work—in a way that will allow people to look for permanent work at the same time as getting experience, and over the course of a year we expect it to help around 263,000 people.

I was pleased to hear that the SNP will support the Labour party in today’s vote, but will the Minister clarify a point relating to disabled people—[Interruption.] There was me thinking that the cheer was for me being about to ask the Minister a hard question, but that turns out not to be the case.

I have a question for the Minister and if he does not know the answer perhaps he will check with the Secretary of State. Questions have been raised about the impact of these measures on disabled people, particularly those in the support group. Will the Minister clarify that the changes will indeed penalise disabled people, even those in the support group, because 70% of the out-of-work support they rely on comes from benefits that will be subject to the 1% uprating? That needs to be clarified in the context of the Secretary of State’s suggestion that disabled people will not be affected.

[Several hon. Members]

rose—

[Cathy Jamieson]

I must conclude because I have only a couple more minutes left.

If the Government will not listen to Opposition Members or to those on their own Benches, including the hon. Members for Brent Central and for Bradford East (Mr Ward), both of whom raised concerns, perhaps they will listen to the voices of people outside this House and the 69% of the public who believe that benefits should rise at least in line with inflation because that is the fair thing to do. Perhaps they will listen to those who work on the front line and see the effects of poverty day in, day out, or to charity leaders across the UK, including Oxfam, the Children’s Society, Citizens Advice and Barnardo’s who wrote an open letter earlier this week.

If that is not enough, will the Government at least listen to what they themselves have said in the past? It is good to see the Chancellor back in his place because in the 2011 autumn statement he said that he wanted to

“protect those who are not able to work because of their disabilities and those who, through no fault of their own, have lost jobs and are trying to find work.”—[Official Report, 29 November 2011; Vol. 536, c. 802.]

If the Prime Minister and the Chancellor really believe that, they need to show it in their actions. Unfortunately, we have today seen a real divide between the Government’s approach and the fair approach from the Opposition.

This watershed moment shows that those warm words have been replaced by a chilling reality—that the Government simply do not care. The true character of the Government has been exposed. There are tax cuts for millionaires while millions of working people pay the price for their economic failure. We need real welfare reform—Labour’s jobs guarantee—that is tough and fair, and that works. We do not need an unfair attack on striving families trying to do their best from this out-of-touch and failing Government.

18:50

[The Economic Secretary to the Treasury (Sajid Javid)]

Let me start with some comments on tone. The Government have been wrongly accused by many on the Opposition Benches of using inflammatory language on this most important issue, but let me refer to some of the inflammatory language that has been used:

“Let’s face the tough truth—that many people on the doorstep at the last election felt that too often we were for shirkers not workers.”

Those are not the words of any Government Member, but those of the shadow Secretary of State for Work and Pensions, so let us hear no more about tone from Opposition Members.

I thank all 36 hon. Members who have made contributions to the debate. They have shown how passionate they are about this issue, not least my right hon. Friend the Secretary of State Work and Pensions, who has devoted nearly a decade of his career to this important matter. While he was chairing the Centre for Social Justice and looking for ways to lift the poorest out of poverty, the Opposition spokesperson, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), was at the Treasury, dishing out money like there was no tomorrow. I therefore find it quite bizarre that he, the man who so eloquently summed up the economic legacy in another quote of his—

“I’m afraid to tell you there’s no money left”—

has told us from the Opposition Dispatch Box how to spend even more. He has told us to commit more money to public spending—money he knows we do not have.

Spending money is something that the right hon. Gentleman and the Opposition have an excellent record on. In the decade before the financial crisis and despite a growing economy, welfare spending increased by 20% and has continued to rise from 11% of gross domestic product in 2008 to more than 13% by 2012.

[Ian Lucas]

Will the Minister give way?

[Sajid Javid]

I will give way just this once.

[Ian Lucas]

Will the Minister confirm that the Bill has been introduced because of the Government’s failure to deliver on the economic pledges they made in 2010?

[Sajid Javid]

The hon. Gentleman should ask that question of the shadow Secretary of State. There is no money left! Let me put it simply: welfare spending costs the UK—

[Mr Byrne]

Will the Minister give way?

[Sajid Javid]

I will give way on that point.

[Mr Byrne]

Will the Minister confirm to the House by how much extra borrowing has gone up over and above his initial forecast because of his failure to deliver growth and jobs in the economy?

[Sajid Javid]

We are dealing with the economic mismanagement of the Government of whom he was part and the deficit is already down by 25% since we came to office.

We are spending more than £200 billion a year on welfare. That is almost £1 in every £3 raised in taxes—more than the budgets for health, education and defence combined. After 13 years of economic mismanagement and overspending, the British people want a country that lives within its means once again. We need to find savings across the Government, and the uprating measures announced in the autumn statement are forecast to save £2.5 billion by 2015-16. It is interesting that not one Opposition Member addressed how they would fill that funding gap by opposing the Bill. That proves they have no answers for the problems the Government face.

[Several hon. Members]

rose—

[Sajid Javid]

As a Treasury Minister, I know only too well how crucial those savings are—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The Minister has said he is not giving way, so we do not need people shouting from the side of the Chamber that he should do so. It is up to him.

[Sajid Javid]

I have five minutes left to sum up the whole debate and I need to take that time.

These savings are crucial. They show that the Government are dealing with the record budget deficit they inherited. They will help to build confidence that the UK is a country in which it is safe to invest in the long term. Meanwhile, in the short term, these are savings that we can reinvest to make a real difference for a stronger economy.

Several of my hon. Friends raised the issue of fairness, including my hon. Friends the Members for York Outer (Julian Sturdy) and for Cannock Chase (Mr Burley). We need to continue to get Britain back to work, but we also need to ensure that being at work pays. Since the beginning of the financial crisis, those in work have seen their average earnings increase by 10%, while those out of work have seen their benefits rise by 20%. This is not fair on taxpayers. It is not fair for my working constituents to pay out more to sustain welfare benefits at the exact time they are facing pressures to stretch their wages further. Nor is it fair to benefit claimants if we ensnare them in a position where it pays to claim benefits rather than to get out and find work.

It is worth reminding the Opposition that those people who work in the public sector, whom this Government employ to carry out their work—such as the people whom the right hon. Member for Birmingham, Hodge Hill used to send out to buy his soup when he was a Cabinet Minister—have seen their pay frozen for two years and will see it increase by 1% for a further two years. The Opposition supported that course of action, but they do not think it is right to have the same restraint—a rise of 1%--applied to benefits and tax credits.

Several hon. Members also rightly raised the issue of protecting the most vulnerable. Welfare spending is all about protecting the most vulnerable members of society. My hon. Friends the Members for Erewash (Jessica Lee), for Keighley (Kris Hopkins) and for Elmet and Rothwell (Alec Shelbrooke) made that point very well, and that is why the disability carer and pension elements of working age benefits and tax credits will be protected. It is why the basic state pension will continue to increase by the triple guarantee—the higher of earnings, prices or 2.5%. Even in the most difficult times, we need to protect those most in need and the changes in this Bill will achieve just that.

We have heard some sensible opinions this afternoon, although it has to be said that they have come almost exclusively from this side of the House. We have also heard some vehement and misguided opposition from the other side of the House. The Labour party opposed the Welfare Reform Bill. The Labour party opposed the benefit cap. Now the Labour party opposes this Bill. The Opposition want to spend billions increasing benefits while people up and down the country face pay freezes. They want to spend billions increasing benefits when they have supported our decision to freeze public sector pay at 1%. Given Labour’s opposition to this Bill, they really need to tell the British people where they would find that £2.5 billion for 2015-16. Would they cut the jobs of 70,000 teachers, or perhaps 40,000 doctors? Perhaps they would raise income tax by nearly 1%. If they do not want to do any of those things, perhaps they need to be honest and admit that the Labour party is for something for nothing, and is the same old Labour party that would borrow billions more to pay for higher benefits. We are taking sensible, measured steps to put right the economic mess that the Labour party left behind, and I commend the Bill to the House.

Question put, That the amendment be made.

18:59

Division 128

Ayes: 262

---

Labour: 243
Democratic Unionist Party: 7
Scottish National Party: 6
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1

Noes: 328

---

Conservative: 281
Liberal Democrat: 45
Independent: 1

Question put forthwith (Standing Order No. 62(2)), That the Bill be now read a Second time.

19:13

Division 129

Ayes: 324

---

Conservative: 281
Liberal Democrat: 41
Independent: 1

Noes: 268

---

Labour: 243
Democratic Unionist Party: 7
Liberal Democrat: 6
Scottish National Party: 6
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1

Bill read a Second time.

Welfare Up-rating Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Welfare Benefits Up-rating Bill:

Committal

1. The Bill shall be committed to a Committee of the whole House.

Proceedings in Committee, on Consideration and Third Reading

2. Proceedings in Committee, any proceedings on Consideration and proceedings on Third Reading shall be taken in one day in accordance with the following provisions of this Order.

3. Proceedings in Committee and any proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings in Committee are commenced.

4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

5. Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee, to any proceedings on Consideration or to proceedings on Third Reading.

Other proceedings

6. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed. —(Karen Bradley.)

19:29

Division 130

Ayes: 322

---

Conservative: 277
Liberal Democrat: 44

Noes: 261

---

Labour: 241
Democratic Unionist Party: 7
Scottish National Party: 6
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1

Business without Debate

Tuesday 8th January 2013 Commons Chamber

Business of the House

Ordered,

That, at the sitting on Tuesday 15 January, notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall put the Questions necessary to dispose of proceedings on the Motion in the name of Mr Secretary Moore relating to Constitutional Law not later than 7.00 pm.——(Karen Bradley.)

Newcastle upon Tyne City Council

Tuesday 8th January 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Karen Bradley.)

19:41

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I am grateful to have this opportunity to discuss what may well be one of the most urgent and pressing issues affecting my city: the budgetary black hole currently faced by Newcastle city council as a result of the reductions in funding received from central Government, alongside ever increasing cost pressures faced by the authority. I am particularly pleased to be joined by my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown), who is keen to contribute to the debate.

Before turning to the effects of the reduction in funding for Newcastle city council, I want briefly to analyse the frankly dire financial position in which the council finds itself. To make up for the significant shortfall in funding that it faces, the local authority anticipates, following analysis by the city treasurer of figures published by Ministers just before Christmas, a shortfall of £100 million over the next three years. So about £39.3 million of the funding black hole is a direct result of reductions in central Government grant funding.

The remainder of the funding gap results from unavoidable cost pressures that the council has to absorb. They include rising costs caused by inflation—of goods and services, heating and electricity—and an ageing population that means that an increasing number of people require support to live independently in the later years. Worryingly, an increasing number of vulnerable children are also being taken into care.

The economic downturn is also having a big impact on the level of income that the council is able to raise from the goods and services that it provides, such as retail lettings and car parking. There is simply less money going round. The council could, of course, have looked to increase council tax to reduce its funding gap, but has decided that that would be the wrong decision at what remains an incredibly difficult economic time for household budgets. I support its decision, for which the Government have made some resources available.

In light of the severity of the situation, the council took the decision to publish a medium-term, three-year indicative budget, believing that an open and honest approach is the best way to ensure that core local services remain affordable and sustainable into the future. However, that three-year budget and the ongoing public consultation on the proposals that it contains have caused significant concern in Newcastle and beyond, as the council has been forced to make difficult, if not impossible, decisions about the services and activities it can simply no longer afford to fund.

Perhaps the most vocal has been the campaign against the council’s proposal to cut, in phases, 100% of its funding to certain local arts organisations, many of which are of national significance. Leading well known Geordies, including Sting, Jimmy Nail, Mark Knopfler and Lee Hall, have publicly castigated the council for the proposal, which would impact heavily on treasured assets such as the Theatre Royal, Northern Stage, Dance City, Live Theatre, the Tyneside cinema and Seven Stories, recently renamed the National Centre for Children’s Books. A campaign is also under way to protect Newcastle city hall—our 85-year-old music venue whose long-term future I genuinely hope can be secured. The council further proposes a 50% cut in funding to Tyne and Wear museums, which will mean a significant reduction for the Discovery museum, the Laing art gallery and the Great North museum.

Nobody needs to persuade me of the importance of any of those institutions to our city. Indeed, they have all played a central role in the remarkable culture-led regeneration that has taken place on Tyneside over the past decade or so under the Labour Government, and many of them mean that creative opportunities and experiences are available to people of all ages in Newcastle that simply did not exist when I was a child. A recent economic impact assessment for NewcastleGateshead Cultural Venues found that for every £1 of public money invested in cultural venues there was a return on investment of £4. These organisations directly employ about 1,000 people and support the local economy, procuring at least two thirds of their goods and services from north-east suppliers.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

I am keen to work with the hon. Lady on trying to persuade the Government that, as with previous Governments, the funding formula is not satisfactory, but she must recognise that other authorities such as Labour Gateshead and Liberal Democrat Northumberland have not slashed 100% of their arts budget or closed their swimming pool.

[Catherine McKinnell]

I am pleased by the right hon. Gentleman’s support. I will go on to address the issue that he raises, because it is a matter of perception that needs to be properly understood.

By significantly improving the quality of people’s lives, these organisations make Newcastle a place in which people want to live, study, work, do business and invest. That is why I am angry about the invidious position in which Newcastle city council now finds itself in being forced to choose between services that make Newcastle the fun, vibrant, economically viable city it is, and services such as protecting the most vulnerable children in our community.

A further vociferous campaign by well known authors has been launched against the council’s proposal to close 10 of its 18 libraries across the city, which for my constituency will mean the branch in Dinnington closing in June this year and those in Newbiggin Hall and Fawdon closing in March 2015. As a mother of two young children, I am all too well aware of the vital role played by local libraries in our communities, whether in encouraging a love of reading, providing a place to study, or offering toy-lending services or access to IT facilities. I am dismayed that the council’s financial situation is so dire that it is closing what, to me, represents part of the great Victorian ideal of municipal service provision—facilities that, once closed, will probably be lost for ever.

Equally saddening are proposals to close City pool by 2016, and in my constituency to reduce funding for Newburn leisure centre while seeking alternative arrangements to manage Outer West pool and Gosforth pool. This scenario is frankly devastating coming just after what must have been Britain’s most successful ever sporting year and a London Olympics that was intended to “inspire a generation”.

Then there are the proposals to cut funding for play and youth services, while a £5 million reduction in funding will, by 2015-16, see the end of Sure Start centre provision in Brunswick, Fawdon, Denton and Westerhope, Lemington, Newbiggin Hall and Newburn—and that is just in my constituency. The importance of Sure Start services in supporting young children and families is absolutely invaluable, and I have serious concerns about the sheer number of places in my constituency that will no longer be able to access such facilities, which have become embedded in local communities.

Possibly of greatest significance in impact on individual lives is the proposed closure of Cheviot View, which opened only in 2008 in Newbiggin Hall to provide overnight residential short-break care for children and young people with disabilities. Many families are extremely concerned about the potential effect on their quality of life if the closure of Cheviot View is to go ahead.

Those are just some of the ways in which cuts to Newcastle city council’s budget will impact on local residents and organisations. Of course, the council is not just reducing front-line services; it is also cutting 1,300 of its remaining 8,000 staff over the next three years. I expect that the Minister will want to characterise these people as “pen-pushers” doing “non-jobs”, but let me assure him that they are not. They are dinner ladies, refuse collectors, people working in children’s services—real people with real lives and real families to support, now looking for work elsewhere at a time when opportunities are pretty scarce.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Is my hon. Friend aware of the misleading statement by the Prime Minister last week, and does she think that it is mere coincidence that the areas hardest hit are those with the greatest need?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I need the hon. Gentleman to rephrase what he thought about the Prime Minister’s statement. He cannot make that accusation. He can say another word rather than “misleading”, and I would like him to do it now.

[Steve Rotheram]

The Prime Minister has already admitted that the statistics he gave only last week were misleading. He said that he was poorly briefed, but the statistics were misleading.

[Catherine McKinnell]

I thank my hon. Friend for his intervention and clarification. I will go on to address some of the misleading information that has been circulating and the concern that it has caused.

What has the Government’s response been to the situation in which Newcastle and other local authorities throughout the country now find themselves? Sadly, it seems to be one of complete disdain. I, like many others, am extremely concerned about the way in which the Secretary of State has attempted to dismiss and downplay the very real concerns about the impact of his funding decisions.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

Does my hon. Friend agree that the Government’s withdrawal of funding is undermining local communities in Liverpool as well as Newcastle?

[Catherine McKinnell]

It is obviously for my hon. Friend to speak on behalf of the people of Liverpool, but I have no doubt that the cuts are impacting on all of the core cities and I will make the economic point about that later in my speech.

Baroness Eaton, who was until recently the Conservative chair of the Local Government Association, described the Secretary of State’s understanding of the effect of local government cuts as

“detached from the reality councils are dealing with”.

I could not agree more. Meanwhile, Sir Merrick Cockell has called the cuts “unsustainable” and the Tory leader of Kent says that his county “can’t cope” with further reductions and is “running on empty”.

When deliberating on what I would raise in this debate —unfortunately time is short and it has been difficult to cut down my speech—I decided to think about what the Minister would say in response. That is fairly predictable, so I will use this opportunity to respond now to what I believe he will say.

I am sure that the Minister will claim, like the Secretary of State before him, that the average reduction in council spending power across the country has been only 1.7% and, indeed, that Newcastle has fared pretty well, because its spending power has fallen by only 1.5% in cash terms as a result of the recent funding settlement. I say to him that that is disingenuous at best and seriously misleading at worst.

The headline figure, which applies to only the first year of the settlement—2013-14—has in fact already been shown to be inaccurate and substantially understated, with the Department for Communities and Local Government double-counting the council tax support grant and council tax income for both 2012-13 and 2013-14. Other errors include the cut in the early intervention grant being significantly understated. Newcastle city council believes a more realistic estimate of the cut to be 3.2%, which is more than double the published figure, or a 4.9% cut in grant funding. I therefore ask the Minister to make a commitment this evening to ensure that statements made about the level of spending power cuts are formally corrected.

The 1.7% headline figure also completely masks the far greater cuts that will take place in year 2 of the settlement. Newcastle faces a 6.8% drop in spending power by 2014-15, compared with a 5.5% average fall in England and only 1.6% in Surrey.

The Minister will no doubt try to persuade me that the cuts being experienced by Newcastle are fair and not disproportionate when compared with other parts of the country, but the facts show clearly that over the next three years the cuts will be much higher in northern areas and a few inner-London boroughs. According to DCLG’s own figures, the cut in Newcastle’s spending power between 2012-13 and 2014-15 will be £218 per person, compared with a national average of £134 and a cut of only £27 per head in Wokingham.

I refer to Wokingham because, in returning to my predictions, I assume that the Minister intends to make the time-honoured comparison between Newcastle’s situation and that of the Berkshire town. He will inform us that Newcastle still has a spending power per household that is more than £700 greater than that in Wokingham. Nobody doubts that that is the case and let me be clear: I have nothing against Wokingham. I use that example because it is the one that Ministers always bring up whenever challenged on their approach to spending cuts.

I thought it might be helpful to clarify for the Minister precisely why Newcastle receives a higher grant than Wokingham—it is because our needs are higher. Newcastle has four times more children in care, greater homelessness needs, higher council tax support needs and fewer people who are able to self-fund their own elderly care. Compared with Wokingham, Newcastle receives four times as much funding for the statutory concessionary fares scheme, yet it faces costs that are nine times higher due to the sheer number of poorer pensioners who use bus services.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Will the hon. Lady give way?

[Catherine McKinnell]

I am sorry, but I do not have much time to complete my speech.

Where local government finance becomes completely inexplicable is in the fact that Wokingham receives £124 more funding per household than Newcastle for “damping”, or protection against excessive loss of grant. Wokingham will receive an increase next year in resources to protect against excessive grant cuts that is three times greater than that in Newcastle. A system that was originally intended to protect councils from high levels of grant reductions is instead providing more protection to some of the wealthiest councils which have faced the smallest cuts in their spending power.

I suspect that the Minister will also mention the £16 billion in reserves, on which the Secretary of State believes councils are blithely sitting. However, he knows that the £16 billion figure across the country includes £12 billion of reserves that are earmarked for specific purposes, such as funding capital investment commitments in future years, meeting insurance claims, meeting equal pay or redundancy costs, and meeting the cost of flood damage that cannot be claimed under the Bellwin scheme. The latter point is of particular relevance to Newcastle, given the devastating flooding in parts of the city last year.

Indeed, reserves were referred to in the Secretary of State’s somewhat patronising document on 50 “sensible savings” that was published last month. I point out to the Minister that Newcastle city council has already made efficiencies of £100 million over the past three years and has undertaken almost all of the Department’s savings proposals.

In conclusion, Newcastle city council believes that it is in an impossibly difficult situation. Newcastle and other members of the Core Cities Group are having to write to the Secretary of State to inform him that

“there will be no money for anything but social care and refuse collection later in this decade”

unless the current funding plans are changed. The Secretary of State and his Ministers appear complacent, dismissive and even indifferent to the concerns that are being raised.

All I am asking is that they treat Newcastle city council and my constituents with the respect that they deserve and act urgently on their concerns.

19:57

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

I congratulate my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) on securing this important debate for the people of the city that we both have the honour and privilege to represent.

It is an unfortunate fact that the map of the cuts distribution and the political map of England are almost identical. The average cut per head for Labour councils is £107, while for Tory and Liberal Democrat councils the average cut is just £36 and £38 respectively. Of the councils with a cut of more than £100 a head, 86% are Labour controlled and only 5.4% are Tory run. As a matter of urgency, the Government should review the way in which the funding formula distributes the cuts burden across different local authorities. I support the call made today by the leader of Newcastle city council, Nick Forbes, to establish an independent body to determine objectively council funding arrangements.

Other issues are specific to Newcastle. In 2009, Newcastle was in the top seven of the 36 metropolitan councils in England for indebtedness. In 2004, when the Liberal Democrats gained control of Newcastle city council, the municipal debt was £431 million. By 2010-11, under the Liberal Democrat administration, that had risen to £962 million. The cost of servicing that debt is more than £40 million a year. That comes straight out of the local authority’s budget. It cannot be adjusted downwards, and if interest rates rise, it will go in the opposite direction.

Newcastle has to meet the costs of cared-for people, out of all proportion to its tax base. There are currently 522 children in care in Newcastle. That translates to 100 children in care per 10,000 children, compared with the England average of 59 per 10,000 children. The situation is the same with the elderly. In 2011-12, the council helped to support nearly 10,000 adults with substantial or critical care needs and more than 17,000 people with lower care needs. In Newcastle, 63 adults per 10,000 are receiving permanent or temporary residential or nursing care. The England average is 39 per 10,000 adults. Pressure on those services is mounting rather than declining, yet the existing position is not even inflation-proofed.

In 2003, the town of Gateshead and the city of Newcastle bid together for capital of culture designation and made a very credible case. The current Government’s policies have forced the council to consult on ending the culture budget, which totals some £1.6 million a year. That is so far removed from anything that Newcastle citizens would want, and from any rational, economic development-based view of the role of the arts in creating employment in a regional centre such as Newcastle, that it serves as an exemplar of how far the council has been forced into considering unpalatable decisions. The situation is all the more ironic because under the Liberal Democrat administration, the council scandalously spent millions of pounds on the mismanaged Waygood art gallery project, which totalled many times more than the council’s annual cultural budget today.

Even essential services such as Sure Start cannot avoid a reduction. The council has taken steps to try to reduce the cost burden on that important service in the short term, but with the added cuts announced by the Government it looks likely that larger reductions will be needed. That flies in the face of the Prime Minister’s pre-election pledge to protect Sure Start.

We cannot even get help from the Government on relatively small things. Months ago, on 4 July 2012, I raised the issue of estate agents’ “To Let” signs. The Government promised to help, yet so far nothing has been forthcoming.

Overshadowing all that is the employment situation in the north-east. More than 3,200 people are unemployed in Newcastle upon Tyne East, nearly 1,000 of whom have been unemployed for more than a year. There are 10 jobseeker’s allowance claimants for every advertised vacancy at the jobcentre, and unemployment is heavily concentrated in the former shipbuilding riverside communities, with an unemployment rate of 14% in Byker and more than 18% in Walker, compared with an average rate of 9.5% for the north-east as a whole and 7.8% for England.

The council’s contribution to the economic development of the east end and the riverside is significant and underpins what is easily the best prospect for building the employment base of the east end of Newcastle. Logically, that should be in the Government’s best interests as well, and they should offer a helping hand.

20:01

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

I first join the right hon. Member for Newcastle upon Tyne East (Mr Brown) in congratulating the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing the debate and giving us the opportunity to go through some of the principles behind the Government’s work on the local government finance settlement. As the hon. Lady will know, there is currently a consultation process. This week—I think on Thursday—I will be meeting representatives from the councils of Newcastle to go through specific issues, and I will take on board their comments.

The proposals that my right hon. Friend the Secretary of State set out on 19 December are out for consultation. I want to be clear that we believe that it is vital that councils continue to play their part in tackling the inherited budget deficit by making sensible savings and delivering value for money for the taxpayer. The settlement recognises the responsibility of local government to find sensible savings and make better use of its resources, and it marks a new type of settlement for local government based on self-determination and financial independence. It is a move from the begging bowl to pride in locality, and it is the start of the biggest shake-up of local government finance in a generation.

As the Secretary of State said, we are shifting power from Whitehall directly to the town hall, and we are providing a direct financial incentive for councils to promote growth and jobs in their area. From April, authorities will directly retain nearly £11 billion of business rates instead of returning it to the Treasury, and they will be able to keep the growth on that share of business rates. Striving councils will benefit by doing the right thing by their communities. If they bring in jobs and businesses, they will be rewarded. That could be particularly opportune in the context of the hon. Lady’s comments about the investment in culture that she feels the council should maintain. I will come back to that in a moment, but I hope she wins that debate with the council.

Research suggests that allowing councils to keep a share of the business rates could generate an additional £10 billion for the national economy by 2020. Our reforms will enable about 70% of local authority income to be raised locally, compared with a little more than half under the current formula grant system. That is a giant step forward for localism.

The start-up funding assessment, which gives each council a share of the funding, will mean £26 billion being shared between councils across the country, with the smallest reductions being for the councils that are most reliant on Government funding. Recent analysis by the House of Commons Library states:

“For each of the expenditure/funding measures the more deprived areas generally receive higher per capita allocations than less deprived areas”

and percentage reductions are

“generally smaller for the most deprived and larger for the less deprived areas.”

It goes on to say that:

“The group of authorities more dependent on formula grant to finance their budget—generally the more deprived areas—is set the highest floor level, representing the smallest reduction.”

We have worked closely with local government in developing the rates retention scheme and listened to what councils have told us during the extensive consultation process last year. For example, we have reduced the amounts we are setting aside for the new homes bonus and academies funding, which in total means an additional £1.9 billion for local authorities up front in 2013-14.

We have put in place a safety-net arrangement to provide protection for councils that might be affected by the closure of a large local employer. We have set the safety net at the most generous level in the range consulted on, meaning that councils will be guaranteed 92.5% of their original baseline funding under the scheme. Local authorities told us that they wanted a stronger growth incentive and we were happy to respond. We have made the scheme more generous, ensuring that at least 25p in every pound of business rate growth will be retained locally. The settlement leaves councils with considerable spending power.

[Mr Graham Stuart]

We have heard an impassioned case on behalf of Newcastle but the settlement inherited from the previous Government was not only a toxic debt but a situation in which funding for local government is 50% higher in urban than rural areas, despite the fact that delivering so many services in rural areas is more expensive. The real injustice is the historic underfunding of rural areas and the danger that that could be held in place all the way to 2020. It is not so much about Newcastle, although the challenges are everywhere, but we are seeing real injustice in rural areas.

[Brandon Lewis]

I have already met a number of councils that have made that case about rural areas. The detrimental impact of damping on some of those areas has been made clear to us in the consultation so far and we are very aware of the issue. My hon. Friend makes a strong point with great passion.

A small number of authorities will require larger savings to be made, but our proposals indicate that no council will face a loss of more than 8.8% in its spending power thanks to a new efficiency support grant. I will declare an interest and return in a moment to the figures mentioned by the hon. Lady because authorities such as mine in Great Yarmouth are suffering thanks to the problems inherited from the previous Labour Government’s funding structure. As the name implies, councils must improve services to qualify for the efficiency support grant. It is unfair to expect, as currently happens, the rest of local government to subsidise other councils’ failure to embrace modernity or move forward to a more efficient delivery of services. The settlement is not about what councils can take but about helping them take the most from what they can make.

Predictably, the doom mongers have been consulting their Mayan calendars and issuing dire warnings about the end of the world as we know it and a billion pound black hole in local budgets. Concerns that the poorest councils or those in the north will suffer disproportionately are well wide of the mark, as made clear in the report by the House of Commons that I cited a moment ago. In fact, the spending power for places in the north compares well—in fact, favourably—with those in the south.

[Catherine McKinnell]

As I said, it is concerning that the Minister and the Secretary of State are referring to just the first year of the budget settlement, rather than the full spending period. The way that core urban city Labour council areas compare with other places—I gave the example of Surrey and Wokingham—is quite significant over the full spending period.

[Brandon Lewis]

I think that Members from Surrey would make the opposite argument in terms of the effect that damping has on their areas, but if the hon. Lady will bear with me, I will move on and try to answer some of the points raised. I have no doubt that some of these issues will be raised in a meeting with Newcastle councils on Thursday. She predicted, quite rightly, that I would mention some of the numbers involved, and I do not want to disappoint her.

As the hon. Lady will know, Newcastle has expected spending power per household of £2,522. She is right that that is almost £700 more than we proposed for Wokingham, but let us not single out Wokingham. I could reel off a list of councils that would love £2,500 spending power per household. My council in Great Yarmouth, which has two of the most deprived wards in the country, is on about £500 less per household. Such deprived areas get far less than areas such as Newcastle, so it is not right to pick out Wokingham.

I could run off a list of councils, but Madam Deputy Speaker would not thank me for listing the majority of councils, which get far less than Newcastle. The figure quoted at the moment compares well with Newcastle’s per household figure for last year, but as the hon. Lady has said, we are still in the consultation process. We expect that Newcastle could do better than the national average next year in terms of overall spending power, and for Liverpool, its co-signatory, to be at the average.

We have maintained the system of damping, which I have mentioned. Some authorities have concerns with damping, but the Government have set a floor below which council funding will not fall.

In the autumn statement, the Chancellor recognised that the sector has risen to the challenge thus far. That is why, unlike most of central Government, local government was exempted from the further 1% top slice next year, which is worth approximately £240 million to councils. However, towards 2014 and beyond, local government needs to continue to find better, more efficient ways of doing things. We need to remember that the money is not created by a central Government money tree; it is hard-earned taxpayers’ money that—

20:11

House adjourned without Question put (Standing Order No. 9(7)).