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Oral Answers to Questions
(9 years, 1 month ago)
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Mrs Emma Lewell-Buck (South Shields) (Lab)
1. What assessment he has made of the potential effect of proposed changes to tax credits on child poverty.
Kirsten Oswald (East Renfrewshire) (SNP)
2. What estimate he has made of the administrative cost of proposed reforms to tax credits announced in the summer Budget 2015.
Wes Streeting (Ilford North) (Lab)
3. Whether he plans to make changes to the Government's proposals to reform tax credits.
Naz Shah (Bradford West) (Lab)
4. If he will bring forward transitional provisions for the proposed changes to the tax credits system.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
Last night, unelected Labour and Liberal peers voted down the financial measure on tax credits approved by this elected House of Commons. That raises clear constitutional issues that we will deal with. We will continue to reform tax credits and save the money needed so that Britain lives within its means, while at the same time lessening the impact on families during the transition. I will set out these plans in the autumn statement. We remain as determined as ever to build the low tax, low welfare, high wage economy that Britain needs and the British people want to see.
Mrs Lewell-Buck
Six thousand, eight hundred children in South Shields are growing up in families who rely on tax credits. One of my constituents told me, “Tax credits at the moment only just make it possible for families to feed and clothe their children as it is. If this Government keep making cuts on those of us who are lowest paid we may just give up hope.” The public, the experts, some of the Chancellor’s own MPs and the other place all agree that his plans will victimise working parents and their children, so will he please give my constituents some hope and shelve these ridiculous tax credit cuts?
Mr Osborne
We will give the hon. Lady’s constituents, and indeed the constituents we all represent in this House, support by continuing to deliver economic security in this country—economic security that has seen unemployment fall in her constituency by 44% since 2010. One of the ways we deliver economic security is by controlling our welfare bill and making sure this country lives within its means. That is what we will continue to do.
Kirsten Oswald
The Chancellor has singularly failed to listen to the SNP and to this House when we have said that he needs to think again about tax credits. He sounds like he is keener on dealing with peers than on listening to them, so how about he listens to the people and just drops these tax credit plans once and for all?
Mr Osborne
This House of Commons voted three times for the changes that were rejected by the House of Lords. I am sure that we look forward to the support of the Scottish National party on that constitutional question. I would make this point to the hon. Lady’s constituents: we need to have a welfare system that works. We need to move to a lower welfare, higher wage economy. We do that by introducing the national living wage and having a welfare bill that the country can afford. That is the best thing we can do for the security of the people she represents.
Wes Streeting
If the Chancellor had listened to the evidence from the outset, he would not be in this mess. If his Back Benchers had voted with their consciences, there would be an alignment of opinion between this House and the other place. Instead of manufacturing a phoney constitutional crisis, why will he not put his toys back in the pram and appreciate that he needs to go back to the drawing board with his failed policy that hits working people the hardest?
Mr Osborne
We will deliver the welfare savings that we were elected to deliver in this Parliament. We will help people in the transition to that lower welfare, higher wage economy. I remember a time when the Labour party used to support moving from welfare to work; it has entirely abandoned that approach. We will be the party that stands up for working people, and working people need controlled welfare and a country that lives within its means.
Mr Andrew Tyrie (Chichester) (Con)
Does the Chancellor agree that whatever our views may be in this House on the tax credit dispute, in overturning the settled will of the elected Chamber, the unelected Lords has exercised the powers of a Chamber of Parliament in the tax area, whereas for at least 100 years it has been well established that it has, and should have, only the legitimacy of a consultative assembly?
Mr Osborne
The Chair of the Treasury Committee makes an important point. Of course, on only five occasions in recent decades has the House of Lords blocked or rejected a statutory instrument, but never on a financial matter. We heard a whole range of opinions yesterday—from Lord Butler, the former Cabinet Secretary, to constitutional experts such as Vernon Bogdanor—telling us that this was unprecedented. We are going to have to address it—the Prime Minister has made that very clear. That is what we have to do to make sure that the elected House of Commons is responsible for the tax-and-spend decisions that affect the people of this country.
Sir Edward Leigh (Gainsborough) (Con)
I have written to the Chancellor about a lady in my constituency, Stacey, to whom I have talked at length. She earns only £11,000 a year and says that £31 a week is being cut from her budget. I know that the Chancellor will meet me to discuss that. Surely the point is that we should have the conversations here, and he will listen, and that ultimately we will be held responsible and chucked out. What is not right is that unelected people, who never have to stand again, should decide how the people are taxed and how we spend our money.
Mr Osborne
I agree with my hon. Friend on the constitutional point, which is a matter that the whole House of Commons will want to address. I take very seriously the point he raises about his constituent. I have made it clear that we will listen with regard to how we make the transition to a lower welfare, higher wage economy. When we introduced controversial welfare changes in the last Parliament, such as the removal of child benefit from higher earners and the introduction of the welfare cap, we made changes, having listened to Parliament, to smooth the transition to both those important reforms. Of course we will listen to the House of Commons in this respect, but the end goal is clear: this country cannot have an unlimited welfare budget that squeezes out other areas of public expenditure. We cannot have a situation whereby we have 1% of the world’s population and 4% of the world’s economy, but 7% of the world’s welfare budget.
Philip Davies (Shipley) (Con)
May I urge the Chancellor to stick to his guns on tax credits? Gordon Brown spent billions of pounds he did not have on tax credits, to try to buy votes at the 2010 election. Does the Chancellor agree that there is no painless way out of huge debt and that people would do well to remember that before they ever elect a free-spending Labour Government again?
Mr Osborne
I completely agree with my hon. Friend. Spending on tax credits went up three times during the last Labour Government, yet working poverty increased during that period. In other words, it had completely the opposite effect from that intended. The people who suffer when the country loses control of its public finances are, indeed, the low paid. They are the people who get turned out of work. It is not the richest in the country or the trade union barons who lose their jobs when that happens; it is the poorest in the country. What we can deliver for them is economic security. So, yes, we will listen on the transition, but we are determined to deliver controlled welfare and economic security for the working people of this country.
Sarah Champion (Rotherham) (Lab)
The Children’s Society estimates that 10,000 children living in 5,100 families in Rotherham will be punished by the tax credit changes. What transitional provisions will the Chancellor put in place to support them?
Mr Osborne
I will set out at the autumn statement how we make sure that we smooth the transition to the lower welfare, higher wage economy that the people of Rotherham and the rest of the country want. We have to make choices in this country. Are we prepared to see our country decline, our budget go out of control and jobs lost, or do we want to continue delivering the economic security that sees a record number of people in work and that has seen employment increase in Rotherham?
Dr Liam Fox (North Somerset) (Con)
The average taxpayer in this country now pays £2,000 a year in extra tax just because of the Government’s debt interest payments. Is not it time that we saw that debt tax on this country’s payslips, so that those who believe they can spend with impunity, including the unelected Chamber, recognise the cost it will provide to future generations?
Mr Osborne
My right hon. Friend is quite right to call it a debt tax. Indeed, one of the largest items of Government spending is paying the creditors we owe, who fund our national debt. That crowds out the spending that we could be putting into our education and transport systems. We have, of course, taken forward an innovation proposed by a Government Back Bencher in the last Parliament, and we now send a tax statement to every taxpayer so that they can see how much we spend on debt interest and how urgent it is that we remove this deficit and reject those who want to borrow forever.
Chris Leslie (Nottingham East) (Lab/Co-op)
On the constitutional point, will the Chancellor read out the specific sentence in the Conservative party manifesto where he promised he would cut tax credits?
Mr Osborne
I am very glad that the hon. Gentleman has a copy of the Conservative manifesto. It is an excellent document, which says we are going to deliver better schools for people, we are going to put more money into the national health service for people, we are going to invest in transport for people and we are going to make £12 billion of welfare savings.
Richard Fuller (Bedford) (Con)
It is good to see the Chancellor in listening mode. There is another group that can assist practically but which we are not talking about—companies. Are our companies in listening mode about the measures that they can take in moving their employees to the national living wage much more rapidly? What can the Chancellor say about what they are doing to help on this issue?
Mr Osborne
My hon. Friend makes a very important point. The savings we make in welfare are part of a package that includes a national living wage. Although the national living wage starts to come in next year, over 200 major companies—such as Sainsbury’s, Morrisons, Costa Coffee and many others—have already, since the Budget, introduced wage increases that match what we are proposing to do by statute, so we are already seeing the benefits of the national living wage coming into effect before it is even introduced.
Stewart Hosie (Dundee East) (SNP)
We know that there are 500,000 more children in poverty since 2010—[Hon. Members: “No.”] There are 500,000 more children in poverty since 2010, and there will potentially be 4 million children in poverty by the end of this Parliament. If the Chancellor is in listening mode, knowing that he does not need to make these cuts to balance the budget, why does he not listen to those who say, “Stop now with the policy of tax credit cuts”?
Mr Osborne
I am afraid that the hon. Gentleman is just not correct on the numbers. Child poverty is down by 300,000 since 2010, and the number of children in workless households is now 500,000 fewer than it was when the Government came to office. The truth is it is difficult to take any lectures from Scottish National party Members about balancing the books. They made forecasts for their oil revenues that would have left Scotland with a £30 billion black hole if they had ever got their way. We will go on delivering economic security for the people of Scotland, and indeed the rest of the United Kingdom, by taking the difficult decisions that his party ducks.
Stewart Hosie
The Chancellor is in denial—absolute denial. Did not yesterday, 26 October, demonstrate two things—the Chancellor has lost his political touch, and his chance of being Prime Minister has just gone up in a puff of ermine-clad smoke?
Mr Osborne
As ever, when pressed, all that SNP Members want to talk about is party political gains, rather than sorting out the mess that this country was in six or seven years ago. As a result of the changes we have made, there are hundreds of thousands more people in Scotland with jobs, businesses are investing in Scotland, as they are across the United Kingdom, and we will go on making those changes. The hon. Gentleman can go on praying in aid a House of Lords that he has spent his whole life campaigning to abolish. I will go on delivering the reforms to our economy that are needed to help Scotland to continue to grow.
Victoria Atkins (Louth and Horncastle) (Con)
At the end of the previous Labour Government, nine out of 10 families with children were eligible for tax credits, some of whom earned up to £60,000. In other words, they were paying their taxes and then getting some back. Is it not better to reduce taxes in the first place so that people keep more of their hard-earned income?
Mr Osborne
My hon. Friend speaks for her Lincolnshire constituents and for the whole United Kingdom in saying that we want to move to a lower tax, lower welfare, higher wage society. We took such a step in the Budget by increasing the personal allowance to £11,000. We also cut taxes for business, reducing corporation tax and expanding the employment allowance so that smaller businesses could take on more people. It is all about continuing to deliver the record levels of employment we see in our country, and indeed the growing economy that today’s GDP figures confirm.
John McDonnell (Hayes and Harlington) (Lab)
May I remind the House that for 3 million people out there who have done everything asked of them and have been bringing up their children and going to work, this is not a constitutional matter? Those people will lose £1,300 a year. Given what happened in the other place last night, may I reassure the Chancellor that if he brings forward proposals to reverse the cuts to tax credits, fairly and in full, he will not be attacked by Opposition Members; indeed, he will be applauded? Can he assure us that whatever proposals he brings forward, he will not support any that an independent assessment demonstrates will cause any child to be forced to live below the poverty line?
Mr Osborne
I am, of course, happy to accept any proposals that the hon. Gentleman puts forward—[Interruption.] I am happy to listen to those proposals, but there is a difference between those who say, “We want to make no savings to welfare at all; we want to abolish things like the benefit cap; we are not prepared to make any savings at all to the tax credit system”, and those who say, “Yes, we want to move to a lower welfare society, but we want help in the transition.” If the hon. Member for Hayes and Harlington (John McDonnell) has proposals to help with the transition, of course I will listen to them, but if he is again promoting uncapped welfare and unlimited borrowing, I do not think that the British people will listen to him.
John McDonnell
The Chancellor has a choice before him: he can push on with tax giveaways to multinational corporations, and press on with cuts to inheritance tax for the wealthiest few that he announced in the summer Budget, or he can reverse those tax breaks for the few, and instead go for a less excessive surplus target in 2019-20. He can avoid penalising 3 million working families with cuts to tax credits, and stick to his self-imposed charter. Is he prepared to listen to reason on this matter? Is he, or any Government Member, prepared to step up and show some leadership on this issue?
Mr Osborne
Let us remember that we inherited a tax system where City bankers were paying lower tax rates than the people who cleaned for them, and multinationals were paying no tax at all. We have introduced a new tax to ensure that multinationals do not divert their profits, and we increased capital gains tax precisely to avoid that abuse of tax rates. We will not take lectures from the Labour party about a fair tax system.
In a way, the hon. Gentleman reveals what he believes, which of course I completely respect. He says that we should abandon our surplus rule and run a deficit forever, but I profoundly disagree with that central judgment. If we borrow forever and are not prepared to make difficult decisions on welfare, we will condemn this country to decline. As a result, people will become unemployed and living standards will fall. That is not the Britain I want to see. We will go on taking difficult decisions to deliver that lower welfare, lower tax, higher wage economy, and this elected House of Commons will continue promoting the economic plan that delivers that.
John Nicolson (East Dunbartonshire) (SNP)
5. What recent discussions he has had with Ministers in the Scottish Government on a future fiscal framework for Scotland.
The Chief Secretary to the Treasury (Greg Hands)
I am currently in discussions with the Scottish Government on the design of their new fiscal framework. We met on four occasions, and after each meeting a joint statement was released providing details of the items covered. Talks have been constructive, and we are hopeful of coming to a final agreement in due course.
John Nicolson
Does the Chief Secretary to the Treasury remain committed to a funding formula based on Barnett, as promised in the vow and referred to by the Smith commission?
Greg Hands
The Government remain committed to the Barnett formula and to delivering all aspects of the Smith agreement during the fiscal framework, and in the Scotland Bill that is currently before this House.
Mr Peter Bone (Wellingborough) (Con)
Will the excellent Minister think again on that answer, because my constituents have £2,000 less per person on public expenditure than constituents in Scotland and we pay the same taxes? How can that be fair?
Greg Hands
It is worth noting that the Barnett formula will continue, but diminish in importance. For the first time, more than half the Scottish Government’s budget will come from Scottish taxpayers rather than a grant from the UK Government. That will add extra accountability to the Scottish Government.
John Howell (Henley) (Con)
6. What assessment he has made of recent trends in the level of employment.
James Morris (Halesowen and Rowley Regis) (Con)
7. What assessment he has made of recent trends in the level of employment.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
We have a record number of people in work. Today’s GDP data show that Britain continues to outperform other western economies, but there are clear global risks and there is still much more to be done to fix our economy. In the autumn statement, we will take more steps to ensure the recovery is felt right across the country, make long-term investments for the future, and, crucially, continue to make the tough decisions required so that Britain lives within her means.
John Howell
The total number of unemployed in my constituency is 219, with youth unemployment at only 36. Will my right hon. Friend join me in praising institutions such as the Henley college, which is providing excellent apprenticeship training?
Mr Osborne
It is very good to hear about the success the people in my hon. Friend’s constituency have had in finding work over recent years and the clear business confidence that exists in Oxfordshire. The Henley college is doing an excellent job in making sure that young people have the skills they need to take the opportunities now out there in the jobs market. We will, of course, go on helping such institutions by increasing the number of apprentices we fund in this country, so that we deliver the 3 million apprenticeships mentioned in our election manifesto.
James Morris
Unemployment in my constituency has fallen by 50% since 2010, but, given the recent news about the difficulties in Caparo in the west midlands, we must not be complacent. Does the Chancellor agree that we need to do more to invest in training and skills, such as the new advanced science, engineering and technology centre at Halesowen college, so we can equip local people with the skills they need to take future opportunities?
Mr Osborne
I visited with my hon. Friend a number of the very successful businesses in his constituency; they are exactly the kind of small and medium-sized businesses that are the backbone of the British economy. They need help with their training, and Halesowen college can help to provide that training to the young people in the area, so they can get the jobs that are being created in his area.
Caroline Flint (Don Valley) (Lab)
The Chancellor claims he is on the side of working people but, as far as I can see, he has been afraid to publish an impact assessment of changes to working tax credits on people taking up or remaining in work. Will he guarantee, given last night’s decision and the delay, to look at that and that, in any proposals, he will include an impact assessment on people taking up work, increasing their hours or staying in work and how that affects employment levels?
Mr Osborne
We have published an impact assessment, an equalities assessment and a distributional analysis of the measures we produced in the Budget. None of those were ever produced by any Labour Chancellor, so we continue to provide the information that people seek. What matters above all is getting the central judgment right about fixing our economy, making sure we deal with our deficit, and going on delivering economic security for the people the right hon. Lady represents.
Mark Durkan (Foyle) (SDLP)
The Chancellor is fond of telling us about 2 million more people in employment, and then he usually does a little facial lap of honour of the Chamber. Has he estimated how many of those 2 million people would be hit by his proposed changes to tax credits? How many would he be comfortable with still hitting in any revised changes?
Mr Osborne
The measures to save welfare—as I say, we will help with the transition—come alongside the increase in the national living wage, the increase in the personal allowance and the action we have taken to cut social rents. They are all part of a package that is delivering economic security to the people in Northern Ireland and across the United Kingdom. The hon. Gentleman remembers what the situation was like five or six years ago in Northern Ireland: high unemployment, a lack of business investment and people looking for work. Now we are in a situation where jobs are being created and people are finding work. Do I say that everything has been done that needs to be done? Absolutely not. We have more to do to bring jobs and investment to Northern Ireland. Let us work together to make that happen.
David Morris (Morecambe and Lunesdale) (Con)
My local council keeps bleating on about cuts, saying how they are going to affect everybody living there. But, on the front page of a newspaper, a management consultancy company that the council brought in said that in my constituency and the region, 10,000 jobs are going to be created over the next five years. [Interruption.] Yes, very lucky. Does the Chancellor agree that his economic policies have put that on track and that my area of the world is going forward, making it better for the people who live there?
Mr Osborne
My hon. Friend is absolutely right. As a result of the combination of him being a very effective local MP and the fact that we have a Conservative Prime Minister and a Conservative Government, we are delivering more jobs into my hon. Friend’s part of Lancashire. Indeed, I remember on visits with him seeing the work being done on the link road to the port, which for decades—including when there were Labour MPs representing the constituency—was campaigned for, but never delivered. Now it is actually being built and delivered as a result of my hon. Friend’s local efforts.
Rob Marris (Wolverhampton South West) (Lab)
Contrary to what the Chancellor believes, my party does want to deal with the deficit; we just think he is going about it the wrong way. We are worried about certain employment trends. The Solar Trade Association, for example, has warned that up to 27,000 jobs could be at risk due the Government’s announcement of the withdrawal of support for solar energy schemes. What steps do the Government propose to take to avoid large-scale redundancies and this employment trend in the solar industry and what support will the Government offer to the industry?
Mr Osborne
Of course we are in a constant dialogue with the solar industry, and solar energy use has dramatically increased over the last five years, but so have the costs of that technology. Quite reasonably, then, we have reduced the subsidy going to solar. There has to be consistency in what Labour Members argue for. On the one hand, they say, quite reasonably, “Please deal with the energy prices that are affecting the steel industry”, but then their spokesman gets up and says, “Please add more cost on to energy bills in order to subsidise renewables.” The trouble is we cannot have both.
Nigel Adams (Selby and Ainsty) (Con)
8. What support his Department provides to people affected by large-scale redundancies.
The Chief Secretary to the Treasury (Greg Hands)
I recognise that all job losses are deeply concerning for those affected. In the case of large-scale redundancies, the Jobcentre Plus rapid response service can provide support for affected workers. The rapid response service stands ready to provide support, and is already working at Kellingley colliery in my hon. Friend’s constituency. We may consider further intervention in exceptional cases where the impact is particularly significant.
Nigel Adams
I, too, welcome the support and retraining packages for steelworkers. As my right hon. Friend rightly says, several hundred workers at Kellingley colliery are facing redundancy later this year, and a further 240 power station workers at Eggborough are going through a consultation and are very worried about their future and their jobs at the station. Will the Chief Secretary urgently meet me to discuss a similar support and retraining package for those workers in my constituency?
Greg Hands
I totally recognise the difficulties faced by many people in my hon. Friend’s constituency. One thing I will say is that my hon. Friend is a real champion for jobs in his constituency. Only last week, he ran his fifth annual jobs fair for his constituents, and that is part of the reason why unemployment there went down by more than 1,000 in the last Parliament. I will, of course, be happy to meet my hon. Friend to discuss further what training and support is available for the constituents affected.
Helen Goodman (Bishop Auckland) (Lab)
Seventeen hundred people in Redcar have lost their jobs, and throughout the north-east it is expected that total job losses will be 9,000. Will the Minister tell those people how long it will take for his measures to take effect and for them to have jobs again?
Greg Hands
We are taking a number of measures in relation to steel. We are tackling unfair trade practices, and voting and speaking on that basis at EU summits. We are doing something to deal with high energy bills and we are making sure that more public contracts go to UK steel producers. At the end of the day, the one thing the UK Government cannot do is deal with the world steel price at the moment. We are offering comprehensive packages, particularly in Redcar, and we are making sure that the situation is as good as it can be at the moment.
Callum McCaig (Aberdeen South) (SNP)
9. If he will take further fiscal steps to support research and development.
The Chief Secretary to the Treasury (Greg Hands)
The Government have made a long-term science capital commitment, investing £6.9 billion in the United Kingdom‘s research infrastructure up to 2021. In the last Parliament we maintained the ring-fenced science budget, in cash terms, at £4.6 billion per annum, and in 2013 we provided £1.75 billion of support in research and development tax credits. Further decisions on support for research will be made as part of the forthcoming spending review.
Callum McCaig
The Government’s record on R and D does not match their rhetoric. Only yesterday, some of the leading companies in the United Kingdom expressed the fear that the Government’s reported plan to replace R and D tax credits with interest-paying loans could hit R and D investment and send it abroad. Will the Minister reassure Parliament and business that R and D grants will continue to be made available to help our businesses to innovate and remain competitive?
Greg Hands
Future plans for R and D tax credits are, of course, a matter for the spending review, but I disagree with what the hon. Gentleman has said in the light of what we have done in the last five years. According to a recent evaluation by Her Majesty’s Revenue and Customs, each £1 of tax forgone on R and D tax credits stimulates between £1.53 and £2.35 of additional R and D investment. During the last Parliament, the Government increased the generosity of the R and D tax credit scheme for small and medium-sized enterprises from 175% to 270%.
Mark Pawsey (Rugby) (Con)
Both the Chancellor and the Prime Minister recently visited the Manufacturing Technology Centre, which is in my constituency. Does the Minister agree that such collaborations between the academic world and manufacturing industry show the way forward?
Greg Hands
I absolutely agree with my hon. Friend, particularly when it comes to innovation. The Global Innovation Index ranked the United Kingdom second in the world in 2013. We have been ranked first for the reach, impact and well-roundedness of our research and first for our research productivity, which is 3.87 times the world average.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
10. What plans he has to provide local authorities within the northern powerhouse with additional funding and powers to raise funds to support those authorities in carrying out newly devolved responsibilities.
The Chief Secretary to the Treasury (Greg Hands)
By the end of this Parliament, local authorities will be able to retain 100% of local taxes to spend on local services, and areas with city-wide elected mayors will be given even greater flexibilities in relation to business rates. Each devolution deal will be bespoke, but the deal agreed last Friday with the North East combined authority includes a new £30 million-a-year funding allocation which will bring together funds to deliver a 15-year programme of transformational investment in the region.
Chi Onwurah
The north-east is keen, indeed determined, to slip Whitehall’s leash, but some fear that hard-pressed civil servants will seek to devolve cuts while retaining control of spending. To avoid that, will the Chancellor commit himself to complete transparency in respect of the budgets of the devolved functions, and to publishing the full funding figures for the years before and after the spending review?
Greg Hands
Of course we will publish information, but I remind the hon. Lady that the deal that was signed last Friday commits us to £30 million a year of additional funding. If she does not think that that is a good deal, perhaps she should listen to Simon Henig, the chairman of the new North East combined authority. He is a member of her own party, but it seems that she does not want to listen to what has been said by a member of her own party. He said:
“The agreement being signed today will bring significant economic benefits and opportunities for businesses and residents.”
The hon. Lady should be welcoming that.
David Rutley (Macclesfield) (Con)
25 . Last week’s announcement of £130 million for the new “China cluster” at Airport City Manchester, and the announcement of a new flight from Manchester to China, further underpin the northern powerhouse. Is it not clear that, for all the Opposition’s droning on about regional policy over recent decades, it is this Government and this Chancellor who are delivering a clear vision for the north?
Greg Hands
Last week’s state visit by the President of China was exceptionally successful, including the Manchester leg of his journey. Various announcements have been made in Manchester concerning the northern powerhouse, but particularly important was the announcement of the first direct flight connecting Manchester and the northern powerhouse region to China. I am sure that that will prove vital to the connectivity of the northern powerhouse, and will ensure that inward investment is brought into the region.
Richard Burgon (Leeds East) (Lab)
Last week, credit rating agency Moody’s concluded that the Chancellor’s decision to fully devolve business rates to local authorities will lead to an increase in council debt levels and fragmentation of the creditworthiness of local government, and will leave many local councils, including Lancashire County Council, with their credit rating downgraded. In the light of that analysis, what safeguards can the Chancellor promise will be put in place to ensure that poorer areas of the country, including in the Government’s so-called “northern powerhouse”, do not lose out on vital revenue as a result of this Government’s reforms?
Greg Hands
The hon. Gentleman needs to know that over many years a large number of local authorities have been calling for precisely this kind of devolution of the tax base so that they have control over their own decisions and the funding given towards them. Many of the local authorities calling for these additional powers have been the Labour authorities in inner-city areas, particularly in the north and the northern powerhouse. We intend to deliver on that to make sure that there is devolution in this area.
David Mowat (Warrington South) (Con)
11. What progress his Department has made on implementing ring-fencing proposals to enhance the stability of major banks.
The Economic Secretary to the Treasury (Harriett Baldwin)
The Government are fully committed to implementing a robust and effective ring-fencing regime, and we remain firmly on track for the separation of banks by January 2019. We passed the last legislation implementing the Independent Commission on Banking ring-fencing recommendations this year, and the Prudential Regulation Authority is currently consulting on the second tranche of implementation rules before publishing the final rules this year.
David Mowat
I thank the Minister for that answer. In 2012, the then Governor of the Bank of England said that unless these regulations were tightly specified there was a risk of their being watered down before implementation in 2019. We now see Barclays joining RBS and Lloyds in requesting significant waivers. Will the City Minister reconfirm the Government’s commitment to Vickers and the design principles within the legislation?
Harriett Baldwin
Of course, the Government remain as committed as ever to implementing a robust ring-fencing regime, as recommended by the Independent Commission on Banking. Obviously, I am not going to comment on speculation about how individual banks would like to implement their ring-fencing rules, because that is a commercial decision for banks, as long as they remain compliant with the considerable restrictions imposed by the legislation. Their deadline is the start of 2019.
John Pugh (Southport) (LD)
There is a lot of crying wolf and worried bleating from the banks on this subject of ring-fencing. Is the Minister aware of any banks that have decamped to foreign parts because of it?
Harriett Baldwin
The Government are delighted that the UK recently, once again, topped the poll as the No. 1 location for a global financial centre. We believe that our legal system, language, geographical location and brilliant skilled workforce, and many other factors, contribute to this being an excellent place to locate a global financial services firm.
Neil Carmichael (Stroud) (Con)
12. What steps he is taking to tackle the productivity gap.
The Exchequer Secretary to the Treasury (Damian Hinds)
My hon. Friend is absolutely right to highlight the importance of increased productivity, which, along with growing employment, will drive growth, raise living standards and ensure a better quality of life for our citizens. Our productivity plan set out a range of reforms designed to make sure that the UK remains a dynamic, open and enterprising economy, supported by long-term public and private investment in infrastructure, skills and science.
Neil Carmichael
Does the Minister agree that the recent report by the Governor of the Bank of England highlighting Britain’s membership of the European Union in positive and authoritative terms suggests that if we make sure that we do get productivity right and do protect our financial services, the prospects for our economy will be very good, both dynamically and in terms of growth?
Damian Hinds
As my right hon. Friend the Chancellor has noted, the best outcome for the UK economy is that we achieve major economic reform of the EU. We want the UK to play a leading role in creating a dynamic, competitive and outward-focused Europe, delivering prosperity and security for every country in the EU, particularly by accelerating the integration of the single market.
Derek Twigg (Halton) (Lab)
One important factor in increasing productivity is ensuring that companies are able to invest in new plant and machinery. Is the Minister convinced that banks are doing all they can to lend to companies to ensure that they can make such investment to improve productivity?
Damian Hinds
The hon. Gentleman is right to identify the importance of private investment. It is one reason why we have brought in the highest ever permanent level of the annual investment allowance, and of course banks play a crucial role in identifying those opportunities.
Suella Fernandes (Fareham) (Con)
Does the Minister agree that raising productivity is the route to raising living standards for everybody, and that this Government’s commitment to cutting corporation tax, our historically high investment in infrastructure and the planning reforms will all contribute to achieving that aim?
Damian Hinds
I agree with all that. It is rising productivity that underpins rising real wages and therefore improving living standards.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Mr Speaker,
“We don’t export enough; we don’t train enough; we don’t save enough; we don’t invest enough; we don’t manufacture enough; we certainly don’t build enough, and far too much of the economic activity in our nation is concentrated here in the centre of London.”
The Chancellor may recognise his own words from his Mansion House speech in July. Why was he so damning of his own record?
Damian Hinds
My right hon. Friend the Chancellor has been absolutely consistent in identifying the need to rebalance the economy and export more. I am afraid that this country’s productivity gap has existed for a very long time—I am not even going to try to pin the blame entirely on the previous Labour Government; it has existed for longer than that. We need to fill that gap and address the shortcomings that our economy has had over a long period. The productivity plan that this Government are bringing in is doing just that.
Seema Malhotra
I thank the Minister for his answer. The Chartered Institute of Personnel and Development has said that his productivity plan is “fatally undermined” by insufficient measures to improve the skills of the workforce. Could that be just one reason why the UK’s productivity gap compared with other G7 countries has widened to the largest on record since 1991?
Damian Hinds
The hon. Lady is right to identify the importance of skills, and that is why human development is absolutely at the heart of the productivity plan. The apprenticeship levy is a really important structural reform to help the delivery of 3 million apprenticeships. Then there is the network of institutes of technology and all the excellent work being done in the Department for Education, working on basic skills, including English and maths, which we know are vital and of such high value in the marketplace to both employers and employees.
Caroline Ansell (Eastbourne) (Con)
13. What plans he has to raise the personal allowance during this Parliament.
The Financial Secretary to the Treasury (Mr David Gauke)
The Government are committed to raising the income tax personal allowance from £10,600 to £12,500 by the end of this Parliament. That is alongside our commitment to raising the higher-rate threshold to £50,000. More than 30 million individuals will benefit from those changes. This year’s summer Budget confirmed that the personal allowance will increase to £11,000 next year and to £11,200 in 2017-18.
Caroline Ansell
I thank the Minister for that answer. Raising the personal allowance is one of the most powerfully progressive things that we are doing in moving towards a lower tax, higher pay society. Income tax cuts will mean that nearly 5,000 people in my constituency will be lifted entirely out of paying income tax. Does that not show that Conservatives are on the side of working people?
Mr Gauke
My hon. Friend is absolutely right. Those working 30 hours a week on the national minimum wage will be taken out of income tax altogether and kept out of income tax. That contrasts with the position in 2010 when people earning just £6,500 were paying income tax. Those people have recently seen an increase in their marginal rate from 10% to 20%.
Joan Ryan (Enfield North) (Lab)
Raising the personal allowance is not a panacea; it will do nothing to address the deep levels of poverty among the working poor. Is the Minister concerned at all at recent Office for National Statistics figures showing that 6 million jobs pay less than the living wage?
Mr Gauke
The best way to address poverty is to ensure that we have a strong economy—jobs growing, increasing productivity, making sure that we have the business investment that we need. This Government are delivering a pro-business approach that is good for job creation, which is why there are more people in work than we have seen ever before.
Karl Turner (Kingston upon Hull East) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability and prosperity of the economy.
Karl Turner
But for the Government’s defeat in the other place, 4,000 struggling families in east Hull would have lost, on average, £1,300 a year. Now that the Chancellor is in listening mode, would he please commit to dropping this vicious assault on hard-working families?
Mr Osborne
In Kingston upon Hull, which the hon. Gentleman represents in this House, unemployment has fallen by 32% since the Government came to office in 2010. That is because we have delivered economic security and committed to the fact that Britain should live within her means. Yes, of course we will listen, as I have said, during the transition we make to that lower welfare, higher wage economy, but we have to go on making savings in our welfare budget or else it will crowd out spending on our national health service and education system. That will mean that Hull does not have the resources it needs to thrive and prosper.
Lucy Allan (Telford) (Con)
T6. Wage increases reduce the burden of tax credits on the taxpayer. What assessment does the Chancellor make of wage increases in my constituency, in the west midlands and in the UK?
Mr Osborne
We have very strong wage growth at the moment in the west midlands and across the country. That is, of course, very welcome. The introduction of the national living wage will benefit, I think, around 300,000 people in the west midlands, including my hon. Friend’s constituents. That is part of a package to support the working people whom she represents and to give economic security to that west midlands engine that we all want to see.
Rushanara Ali (Bethnal Green and Bow) (Lab)
T2. Following last night’s votes, the Chancellor said that he would listen. Will he confirm that he will not be writing to the 3 million families before Christmas delivering the devastating news that their tax credits will be slashed? Surely the Chancellor—an aspiring future Prime Minister—does not want to go down in history as Scrooge delivering devastating news to millions of people. Or does he?
Mr Osborne
Obviously, we will inform families once the changes that we have made become law.
Damian Collins (Folkestone and Hythe) (Con)
T7. The channel tunnel and port of Dover are very important pieces of national infrastructure. When there are disruptions to services, as we saw in chaotic scenes this summer, they cause misery for people in Kent. Will my right hon. Friend agree to meet me and other Members from Kent to discuss what funding can be made available to find a long-term solution to managing road freight in Kent and ending the misery of Operation Stack?
Mr Osborne
Of course I would be very happy to meet my hon. Friend and other Kent MPs affected by the traffic jams that build up when there is disruption at the channel tunnel. We have made available Manston airport as a temporary measure to help alleviate the congestion caused by Operation Stack. There is a proposal from Kent about a much bigger investment in a longer-term solution and I will be happy to talk to my hon. Friend and his colleagues about that.
Carolyn Harris (Swansea East) (Lab)
T3. Given the growing evidence that fixed-odds betting terminals are being used as a prime vehicle through which to launder money, will the Chancellor assure the House that there will be a prominent focus on the machines in his upcoming anti-laundering action plan?
The Economic Secretary to the Treasury (Harriett Baldwin)
The hon. Lady will be aware that we are in the process of considering how we implement the fourth anti-money-laundering directive. We will be looking closely at the evidence, and I encourage her to get in touch with me.
James Morris (Halesowen and Rowley Regis) (Con)
T8. The Black Country local enterprise partnership has done an excellent job in bringing jobs and investment to the black country, but does the Chancellor agree that the time has come for local enterprise partnerships to work together with the west midlands combined authority to deliver further growth, jobs and investment for the west midlands region? [Interruption.]
Mr Osborne
I hear the hon. Member for Wolverhampton South West (Rob Marris) saying, “Well said!” Let me make this point. In the west midlands we have the real prospect of a further big devolution to the combined authorities with an elected mayor. We are working with the local authorities, the three excellent local enterprise partnerships and the local MPs. We are close to an agreement, but let us try to get it over the line. That would give the people of the west midlands the control over local decision making that we have now given to the people of south Yorkshire, Manchester, the north-east and Teesside.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
T4. In my constituency, there are 9,000 families with children claiming tax credits. Some 5,500 of those are working families. The Chancellor said that he is listening but has dismissed every proposal so far. Millions of families need him to change course and make work pay. Will he listen now and introduce transitional relief so that those working families will not be out of pocket by £1,300?
Mr Osborne
We are listening, and we are listening in particular to what we can do to help with the transition to the lower welfare, higher wage economy that we want to see in the hon. Lady’s constituency and across the country. We will also take steps, as we always do, to ensure that work pays by increasing the personal allowance—we are committed to increasing it to £12,500 in this Parliament—by introducing the national living wage, which will help many thousands of people in her constituency, and by supporting the businesses in her constituency, without which we would not have the jobs that are now employing local people.
Chris Green (Bolton West) (Con)
Since 2010, more than 37,000 of my constituents have had their taxes cut, enabling them to keep more of what they earn. Some of them have begun to accumulate savings for the first time. Can the Chancellor assure my constituents that the Government will continue to cut their taxes and support them with their future saving?
Mr Osborne
I can absolutely give that assurance to my hon. Friend, who represents his constituents in Bolton so well. We will go on delivering lower taxes to help the working people in his constituency. We will also ensure that we go on supporting savings in his constituency. We are introducing a new savings allowance and a help-to-buy ISA to help the people he represents to get on the housing ladder.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
T5. The Chancellor seems to have taken issue with being told to think again by the other place last night. Will he now reflect on how thousands of my constituents—people who work hard and do the right thing—must feel at the prospect of losing thousands of pounds every year as a result of his actions?
Mr Osborne
As I have said, the people who suffer the most when the economy fails and when the country fails to control its public finances are precisely the people the hon. Lady is talking about: the low paid. They are the people who lose their jobs. They are the victims of economic insecurity. We are determined to deliver economic security and a controlled welfare bill—which, after all, the people she represents have to pay for through their taxes—and we will set out how we will ease the transition to that lower welfare, higher wage economy.
Richard Graham (Gloucester) (Con)
The coalition Government freed pensioners from mandatory annuities and encouraged saving through ISAs and auto-enrolment. However, tax relief on contributions to pensions is expensive and favours higher-rate taxpayers much more than others. Does my right hon. Friend agree that that is an area in which sensible reform could be considered, in order to help to balance the budget without disincentivising saving?
Mr Osborne
My hon. Friend is right to say that we have taken significant steps to encourage saving, not least by giving pensioners control over their pension pots in retirement and by trusting those who have saved all their lives with the money that they have earned and put aside. He is an expert in these matters, and he will know that we are open to consultation on the pensions taxation system at the moment. It is a completely open consultation and a genuine Green Paper, and we are receiving a lot of interesting suggestions on potential reform. We will respond to that consultation fully in the Budget.
Kirsten Oswald (East Renfrewshire) (SNP)
T9. Will the Chancellor confirm that there is nothing in the passing of the charter for budget responsibility that will restrict the Scottish Government’s ability to borrow, which is already enshrined in statute under the Scotland Act 2012?
Mr Osborne
I am happy to confirm that the deal we struck with the Scottish Government on capital borrowing remains intact. Indeed, we want to strike a new agreement with them involving a new fiscal framework, and we are having a good discussion around capital borrowing powers, resource borrowing powers and the mechanism to ensure that Scotland genuinely sees the benefits and bears the costs of any decisions taken by the Scottish Government. That represents the true nature of devolution, which I am sure the Scottish National party wants to see, so let us make sure we get that agreement.
Johnny Mercer (Plymouth, Moor View) (Con)
I welcome my right hon. Friend’s comments last night on transitional arrangements, but does he agree that we simply must reform this crazy tax credit system, which enforces low pay, and that we will take no lessons from the Opposition, who have failed cities such as mine when it comes to helping the working poor? This tactic of bribing our lowest earners and most vulnerable people, not to improve social mobility or to help them but simply to win votes, is deplorable and must end in this country for good.
Mr Osborne
My hon. Friend makes a powerful point: we have created a welfare system that subsidises low pay, and surely it is better to increase that pay. That is why we are introducing the national living wage and I know that will help many of the people my hon. Friend represents in Plymouth.
Mary Glindon (North Tyneside) (Lab)
T10. Under the devolution deal, the Chancellor has committed £30 million a year to create a new investment fund for the north-east. Will this be wholly new money or will existing grants be cut? Where is the guarantee that he will not be robbing Peter to pay Paul?
Mr Osborne
It is additional new money and it is a long-term commitment to the north-east of England. Of course, we could not have reached this agreement without the support of the local Labour council leaders who have come together through the combined authority to strike what I think is an historic deal. There has been lots of conversation over many years about devolving power to the north-east; now we are going to have the elected mayor with powers that are currently exercised in London being exercised in the north-east. That is proper devolution.
James Heappey (Wells) (Con)
Last week Mudgley cider producer Roger Wilkins told the local press that cider is
“an agricultural lubricant, an agricultural wine for the working man”.
Will the Chancellor continue to support hard-working people and lubricate the Somerset economy by cutting tax on cider?
Mr Osborne
I very much remember my visit, I think with the Prime Minister, to a cider producer in my hon. Friend’s constituency before the election. It turned out to be an extremely productive visit of which he is the living representative. He will know that in 2010 we reversed the cider tax that was being proposed by the previous Labour Government and we have been able to help cider producers. I think the industry is incredibly important and I will take what steps I can to support it in the future.
Marie Rimmer (St Helens South and Whiston) (Lab)
The Resolution Foundation has found that all tax and benefit measures announced, including the national living wage, will push an additional 200 children into poverty by 2016. Two thirds of those children will be in working families. By 2020 up to 600 further children will be pushed into poverty. Chancellor, you said you would listen to the Lords, and indeed the bishops, last night; will you now share with the House what constructive action you will take to protect the poorest families and children?
Mr Osborne
The hon. Lady raises her question in a perfectly fair way. I will listen to the concerns that have been raised in this, the elected Chamber, about the transition of the welfare reforms we have put forward precisely so that we continue to help working families. Those families are best helped when we have economic security, a controlled welfare budget and a system where we do not subsidise low pay but we increase wages through the national living wage. We will make sure in the autumn statement that we help working families.
Several hon. Members rose—
Mr Speaker
I did not want to interrupt the question because I understood the hon. Member for St Helens South and Whiston (Marie Rimmer) was getting to her point. I understand why Members like to put their inquiries directly to the Minister, but may I please appeal to Members not to use the word “you” in their questions? We go through the Chair in debates for good reasons. I have no proposals on these matters. The Chancellor might have; we shall see.
Christopher Pincher (Tamworth) (Con)
Over the last three years unemployment in Tamworth has fallen faster than anywhere else in the country. As my right hon. Friend is in listening mode, will he tell the House whether he has heard any sensible representations from the shadow Chancellor or others about how to decrease business taxation and regulation to create more jobs in the west midlands?
Mr Osborne
I am sorry to say I have not, because the only proposals that have so far been put by the Opposition are for an increase in business taxation—that was in their election manifesto—and a wealth tax, which at the weekend, the shadow Chancellor was talking about potentially introducing in this country. So his proposals—and to be fair to him he has been entirely consistent on this for 30 years—are essentially for a high tax, big state economy where, frankly, private businesses do not have such a big role to play. I think that is the wrong direction for our country.
Patrick Grady (Glasgow North) (SNP)
How much would the Chancellor save for the public purse by abolishing the House of Lords?
Mr Osborne
That is a very decent proposal for the autumn statement, to which we will give proper consideration. People who have been in Parliament with me for the last 14 years know that my view is pretty clear—we should have an elected House of Lords—but of course that view has not prevailed in this Chamber in the years I have been both on the Opposition and Government Benches. However, I do think that while we have an unelected House of Lords, it should respect a constitutional convention that has existed for 100 years, and we need to look at that now.
Several hon. Members rose—
Tax Credits
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I seek leave to propose that the House should debate a specific and important matter that should have urgent consideration—namely, the uncertainty caused to millions of UK families following the vote on tax credits in the House of Lords yesterday. Accordingly, therefore, I would like to apply for an emergency debate under Standing Order No. 24.
Across the UK there are 7 million working-age families with children eligible for tax credits, and the impact of this Government’s proposed tax and benefits changes will be to reduce their incomes by an average of almost £1,300 a year. In Scotland, over 200,000 working families with around 350,000 children are set to lose out. That is an enormous and disproportionate impact on parents who are working hard in low-paid jobs to support their families.
But yesterday’s vote in the House of Lords, when peers passed amendments for the cuts to be put on hold, subject to independent analysis, and for transitional protections to be put in place for three years for those affected by them, throws the Government’s plans into chaos and leaves low-income families in the dark. Members of this House need to know how the Government intend to respond, and need to know as a matter of urgency.
Yesterday in the House of Lords the wheels came off the wagon quite spectacularly for the Government’s austerity reforms, in spite of a valiant whipping effort that saw 93% of Tory peers turn up to support the Government. The degree of Cross-Bench concern about the injustice of these measures is almost unprecedented. I know I am not the only person on this side of the House—or, indeed, the other side of the House—who berates the House of Lords as an affront to a modern democracy. But when even our unelected, unaccountable and, in my view, rather bloated second Chamber unites to tell the Government they have got it very wrong, it is incumbent on the Government to listen. When even the leader of the Tory party in Scotland tells her own Government that these cuts to tax credits are “not acceptable” and that they need to think again, it is incumbent on the Government to listen.
The Government have tried to present these austerity cuts as part of a package of measures, but we know that their paltry increases to the minimum wage fall very far short of a real living wage. This Government have made a choice to put parents with low-paid jobs on the frontline of their failed austerity agenda and we need answers from them urgently. What transitional arrangements are now being put in place for the millions of working families who are set to lose out? Will they give us a cast iron assurance that they will not now flood the other place with more Tory appointees who turn up like phantoms to do their dirty work?
Mr Speaker
I have listened carefully to what the hon. Lady has said and I have to give my decision on this matter without stating any reasons. That is the requirement upon the Chair. I am afraid that I do not consider that the matter which the hon. Lady has raised is appropriate for discussion under Standing Order No. 24, and I cannot therefore submit the application to the House.
I said that I am not required to give any reasons and, indeed, there is a sense in which I am required to give no reasons. I do, however, think it is important for people beyond this House to find our procedures entirely intelligible, and I think it worthwhile to note that these important matters have just been debated, they will be debated further today, and there is a scheduled debate on them on Thursday.
Members have other means by which to pursue these matters and I feel sure they will, but the hon. Lady has very properly asked me whether I think this should be debated as an emergency debate under Standing Order No. 24, and, having reflected upon what she said, my answer on this occasion is no.
Dr Liam Fox (North Somerset) (Con)
On a point of order, Mr Speaker. Across the House there is a great deal of genuine concern about the implications of the events in the unelected Chamber last night, and many of us would welcome your initial view on the constitutional implications of that. Many of us believe that those with no accountability for taxation have a moral duty not to vote on such issues, and many of us would go further and believe that it is a bit rich to question, for example, the democratic deficit in the European Union when we have an unelected and appointed Chamber as part of our own legislature.
Mr Speaker
Just before I respond to the right hon. Gentleman, I will hear the hon. Member for Monmouth (David T. C. Davies).
David T. C. Davies
Further to that point of order, Mr Speaker. I looked through the Standing Orders last night and discovered that what the hon. Member for Banff and Buchan (Dr Whiteford) called an “unelected, unaccountable and somewhat bloated” second Chamber actually has no power at all to reject European Union treaties, such as that on the Transatlantic Trade and Investment Partnership, but it seems that it does have the power to reject the will of this elected House. As a doughty defender of elected Members of Parliament, will you issue guidance as to how we may ensure that the will of this elected House prevails?
Mr Speaker
I think I will do a wrap-up at the end. Let us hear from the hon. Member for City of Chester (Christian Matheson), and then we must hear from Mr Rees-Mogg—the day would not be complete without him.
Christian Matheson
Further to that point of order, Mr Speaker. I am pleased to hear the late conversion of Conservative Members to democracy and the rejection of an unelected Chamber, but can you give me some guidance? Is there not a constitutional role for the other place in giving pause to this House when it has made a decision that is out of sync with feelings in the country, so that the House can look at that decision again?
Mr Speaker
Order. I say to the hon. Member for Eltham (Clive Efford), who is a very distinguished taxi driver by profession, that he will be aware of the cab rank principle, and also of the principle of waiting in a queue for one’s turn. We will come to him. Don’t worry, he will not go cold. We will look after his interests, I am sure.
Mr Rees-Mogg
Further to that point of order, Mr Speaker. I wonder what you will do to remind their lordships of our declaration of privilege from 1678, declaring that all financial matters pertain to this House, a privilege that the House of Lords has now ignored only three times since 1860. As our mouthpiece, will you bring that to the attention of their lordships in no uncertain terms?
Alex Salmond
Further to that point of order, Mr Speaker. I am becoming increasingly concerned about the outbreak of revolutionary fervour among Conservative Members. Has there ever been a precedent for a Chancellor of the Exchequer being outflanked as a defender of the working classes by the House of Lords?
Mr Speaker
I think Mr Efford is about to burst, so we had better take his point of order.
Clive Efford
I wait at your pleasure, Mr Speaker.
Further to that point of order, may I point out that we have had a general election this year, and that during the campaign the Government were consistently asked whether they had any intention of cutting tax credits? They consistently said that that was not their intention. It is parliamentary convention that the House of Lords does not overturn manifesto commitments, but that measure was not in the Conservative manifesto and there is clear concern in the country about it. It is right that the House of Lords should ask the Government to think again.
Mr Speaker
One does not have to put one’s hand up, Mr Docherty, but it will be a pleasure to hear your point of order before I respond.
Martin John Docherty
Further to that point of order, Mr Speaker. It seems that the House of Lords—the unelected, unaccountable, bloated Chamber through the other side of the doors—is causing some angst today. Will you forgive my ignorance as a new Member, Mr Speaker, and highlight to me and many of my Scottish National party colleagues why, while we cannot vote on some issues in this House, the unelected and unaccountable barons and baronesses of the Scottish peerage will be able to vote on them in the other?
Mr Speaker
The short answer to the last question, which I think had something of the character of a rhetorical inquiry, is no.
Let me say, with all courtesy to the House, that I was keen to hear all the points of order before responding. I intend no discourtesy to the House when I simply say this: the responsibility of the Chair is for order. Nothing disorderly has occurred. There has been no procedural impropriety; that would not have been allowed. Whether people like what happened last night, because of the substance of the issue or their views on constitutionality, is a matter for each and every one of them. In terms of where matters rest, as I said last night from the Chair in response to a point of order from the shadow Chancellor, this is now a matter for the Government to take forward as they think fit.
With reference to the point of order from the Chair of the Welsh Affairs Committee, the hon. Member for Monmouth (David T. C. Davies), the hon. Gentleman flatters me. He does not need guidance from me on how to go about his duties, and neither does any other right hon. or hon. Member. It is not for the Chair to put a gloss on what transpired last night. I think, in truth, that Members are actually not all that interested in my gloss or my response to their points of order; they simply wanted to get their views on the record, and that they have done.
Mr Speaker
I will indulge you with one further point of order, Mr Rees-Mogg.
Mr Rees-Mogg
I am grateful to you, Mr Speaker. I want to refer back to this House’s claim of privilege, which we have made for many centuries. I would have thought that you were the defender of this House’s privileges and that this is beyond the immediate political debate.
Mr Speaker
The matters that are currently in dispute are inevitably of what I will call a high-octane character. In such circumstances, if I may very politely and respectfully say so to the hon. Gentleman, I do not think it helps matters if the Chair adds in substantive terms, without exceptionally good reason, to the total number of evaluative comments that have already been made. I think it would be better not to do so. I do jealously guard the rights of this House, but I have to rest with what I have said—that nothing procedurally improper has taken place. Let us wait to see how matters are taken forward. As I said to the hon. Member for Gainsborough (Sir Edward Leigh) last week, in the final analysis each House knows what its powers are and are not.
Mr David Winnick (Walsall North) (Lab)
Further to the point of order, Mr Speaker, I wonder whether it would be in order for a motion to be debated on the Floor of the House congratulating the House of Lords on what it decided yesterday.
Mr Speaker
The short answer to the hon. Gentleman is that it would be entirely orderly if he, for example, secured a Backbench Business Committee debate. It is not for me to encourage such a debate, nor to discourage it, but the answer to his question is as I have stated.
Benefit Sanctions Regime (Entitlement to Automatic Hardship Payments)
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
I beg to move,
That leave be given to bring in a Bill to amend the system of benefits sanctions; establish automatic hardship payments where sanctions have been imposed; and for connected purposes.
There are people in my constituency who have no food to eat today. Until recently, they had been claiming employment and support allowance or jobseeker’s allowance. Their social security payments have been stopped; they have been sanctioned. As things currently stand, they have no immediate right of appeal. Some of these people may have made a mistake in their paperwork or have been late for an appointment. They may lack the necessary IT skills to use Universal Jobmatch or have been asked to do something by jobcentre staff that they did not do. Whatever their actions, the consequences carry too heavy a burden. These people are now left with absolutely no means to sustain themselves. On every level, this is an unacceptable state of affairs. This is the central issue that my proposed Bill addresses. It will ensure that all those who are sanctioned automatically and immediately receive a hardship payment, and that those payments will not require to be repaid.
The current system has punished military veterans for selling poppies. It has removed the sole source of income from those who failed to complete their medical examination because they were having a heart attack at the time, and it has withheld money from people who failed to complete their job search evidence form on Christmas day. Indeed, one of my constituents was recently sanctioned on the strength of hearsay evidence that she had been incarcerated, despite that being wholly untrue. It cannot be right that sanctions are applied on that basis.
The system that administrates those punishments is deeply and fundamentally flawed. Many of those affected are not even aware of their rights. I have met constituents who were not told by staff at their local jobcentre about hardship payments or even how to appeal. That is why my proposal gives those facing sanctions an automatic right to those payments. That will ensure uniformity in their application.
In my view, anyone who lacks the means to buy food or heat their home is a vulnerable person. There is currently a formal appeals process. When invoked, 50% of those appeals against sanctions—half of them—are upheld. This is a system that is, at best, 50% correct. If another process in this land resulted in half of the judgments being overturned, there would be a national outcry.
The human impact of sanctions is such that Department for Work and Pensions staff have been required to receive guidance on how to deal with victims suffering from mental health issues who are pushed towards self-harm or suicide. It is right that staff have measures in place to help them support vulnerable people who have been driven to their limit, but it is tragic that that is a central part of our welfare system.
The DWP has not been able to use its experience to provide any credible evidence whatsoever that the system of financial penalties works to get people back into stable employment. I am particularly disappointed that the Government failed to act adequately in their response last week to the Work and Pensions Committee report. This Chamber has heard time and again that this is an ideological crusade against the poor, not an evidence-based mechanism to help people find work. It is driving people in this country to food banks.
Organisations such as the Trussell Trust and local food banks such as The Gate in Alloa exist because they identified a need that needs to be met. They should not be a necessary extension of the UK’s failing benefits system, but they are. The social security system as it exists today is not doing what it says on the tin, and the vulnerable cannot wait any longer for this Government to get it right.
Research carried out by the Child Poverty Action Group has found that 20% to 30% of food bank users said that their household’s benefits had recently been stopped or reduced because of a sanction. The same research showed that deciding to accept help from a food bank was often difficult, and it was described by participants as “unnatural”, “embarrassing” and “shameful”.
What does it say about us if fellow citizens have to rely on charity to sustain themselves? The protection of the vulnerable should be a central tenet of any Government’s work. It is not a peripheral responsibility and it should certainly not be devolved to the kindness of others.
Other research from Oxfam, presented as evidence to the Work and Pensions Committee earlier this year, shows that when women are sanctioned it tends to disproportionately affect others, because caring responsibilities often fall to women. Furthermore, charities such as the Single Parent Action Network and Gingerbread have seen a reduction in the number of DWP advisers who are aware that they are able to use flexibility when dealing with lone parents who would otherwise face financial sanction. That leads to a significant number of lone parents being sanctioned erroneously, only to have the decision overturned. According to Gingerbread, the figure is 42% for lone parents, compared with 31% of all claimants. The current regime impacts greatly on women, and that is why I am particularly proud that my Bill has the cross-party support of nine female MPs.
Six months ago the Work and Pensions Committee called for a broader, independent review of benefit conditionality and sanctions, because of its concerns about the effectiveness and operation of the current process. After considering the balanced, cross-party report for half a year, last week the Government rejected its central proposal. Instead of a fundamental review of the whole system, the Government propose what they call a yellow card system. A yellow card is something players get during a football or rugby match. This is no game. Such terminology is unhelpful and wholly inappropriate.
A complete rethink of the process is required. The tired old argument that it helps people to find work has not been proven, while the evidence of the despair and poverty inflicted on its victims is growing larger by the day. It must be reformed in this place, because the limited powers over welfare offered by this Conservative Government to the Scottish Parliament specifically preclude measures to mitigate the system I have described today. The Scottish Parliament should be given the powers required to build a humane system of social security, not piecemeal powers that can only mitigate the negative impact of Tory policies. From the sanctions regime to the tax credits fiasco, this Government continue to punish the poor. This relentless assault must come to an end.
The Bill will not address all the serious problems of this punitive system. I wish it could. I continue to support a full moratorium on all benefits sanctions until an independent and fundamental review of the whole process takes place. Under the particular parliamentary process in question, however, I believe I have proposed a simple and pragmatic measure that would address the fundamental issue of people being knowingly left in destitution.
This Bill will ensure that those who are sanctioned will automatically and immediately receive a hardship payment, and that those payments will not need to be repaid. No one should be left without by our social security system. This Government should not abandon those people who need their help the most. Ministers must reconsider their position on that fundamental issue. It is the right thing to do. My proposal would be a positive first step in protecting the vulnerable in my constituency and beyond.
The sanctions system is why an increasing number of people and their families, in every part of our country, do not have the means to eat today. It is one of the key reasons that food bank use in Scotland and across the whole of the UK is at an all-time high. The system supporting it is flawed and needs urgent reform. That is why this Bill is necessary, so I urge this House to support me today.
Philip Davies (Shipley) (Con)
I rise to oppose the Bill, but congratulate the hon. Member for Ochil and South Perthshire (Ms Ahmed-Sheikh) on promoting it. She used to be a member of the Conservative party, but she has certainly regressed since those heady days. It seems a long time since she espoused any Conservative principles—she certainly did not do so today.
I would not want people who are listening to this debate to run away with the idea that people across the country and across this House are opposed to benefits sanctions in the way set out by the hon. Lady. In fact, many of us are very supportive of the sanctions regime. To start with, we should point out that sanctions have always played a part in this country’s benefits system—it is not this Government who introduced them. They have always been an essential part of the benefits regime, to make sure that people do what they are requested to do in return for those benefits.
Many of my constituents contact me to say that they think that the requirements on people who claim benefits, which taxpayers pay for through their taxes, should be even more onerous, not less so, as the hon. Lady seems to suggest. I refute her starting point, which is that sanctions are a bad thing. In my opinion sanctions are a good thing, and the least the taxpayer should expect is that people abide by the requirements that are understandably made of them in return for claiming benefits.
On the hardship fund, which the Bill directly refers to, the hon. Lady seemed to peddle some information that may not turn out to be quite as it seems. It should be pointed out that jobseekers who are sanctioned can apply for a hardship payment that is equivalent to 60% of their normal benefit claim, and those on jobseeker’s allowance who are seriously ill or pregnant can receive 80% of their normal benefit payment. If the hon. Lady wants it to go any higher than that, and if people are just going to have their sanction replaced in full by a hardship payment, there would be no point in having any sanctions in the first place, so I refute her point.
The hon. Lady should have pointed out in her remarks—this makes her Bill rather redundant—that those with children, all ESA recipients and anyone categorised as vulnerable can claim hardship payments from day one of their sanction. She omitted to say that in her speech. She was trying to give the impression that that is not the case, but it is the case. Although other jobseekers cannot claim for the first 14 days of a sanction, the most vulnerable people are already protected. Contrary to the point she made, claimants are regularly told about the availability of hardship payments throughout their claimant journey, and improvements have been made to the payment process to ensure that payments are made within three days. The vast majority who apply do receive hardship payments.
The hon. Lady mentioned the independent review of sanctions and the Select Committee report. She should bear it in mind that Matthew Oakley, who led the independent review of JSA sanctions, said that sanctions are
“a key element of the mutual obligation that underpins both the effectiveness and fairness of the social security system”.
She did not manage to point that out in her remarks. She spoke about the Select Committee report, but the Chairman has said that he was
“pleased that the Government has accepted many of the Committee’s criticisms of its approach and…the recommendations for change.”
Hardship payments are already available to the most vulnerable people from day one of a sanction, and most people in the country support the principle of sanctions when claimants do not fulfil their obligations. I must say, Mr Speaker, that there is a book as thick as you like of the reasons people may avoid being sanctioned. The idea that people can just miss a five-minute appointment once and are automatically sanctioned is for the birds. That may well be the tale they go and tell the hon. Lady in her surgery, perhaps because they want her sympathy when they go and tell her their tale. I suspect that the truth about why they have been sanctioned is often very different from the tale they tell her. I am sorry that she just seems to accept what they say hook, line and sinker, without any criticism whatever. I know that SNP Members do not like to hear any criticism. They are not used to it in Scotland, but they had better get used to it in this House. [Interruption.] SNP Members would do well to listen to other people’s opinions from time to time. They may learn something. [Interruption.]
Mr Speaker
Order. Mr Angus Brendan MacNeil, you have yet to reach the apogee of statesmanship, which is my long-term ambition for you. Calm, like the colleagues to your left and right, is the right course—calm!
Philip Davies
To try to get the hon. Gentleman to become a statesman may be beyond even you and your skills, Mr Speaker.
Given that the most vulnerable already have access to hardship payments from day one and that the sanctions regime in itself is a good thing, given that what the hon. Lady proposes goes way beyond the recommendations of the Oakley review and even way beyond the recommendations of the Select Committee, and given that people are already informed about the hardship payments throughout their claimant journey, her Bill is not only bad—if anyone adopted her strategy—but completely unnecessary.
I do not intend to deprive the hon. Lady of her day in the limelight by pressing the Bill to a Division, but I thought it worth while pointing out that many Members of the House and, more importantly, many people in the country, do not accept her criticisms of the sanctions regime for benefits.
Question put (Standing Order No. 23) and agreed to.
Ordered,
That Ms Tasmina Ahmed-Sheikh, Hannah Bardell, Mrs Sharon Hodgson, Caroline Lucas, Ms Margaret Ritchie, Liz Saville Roberts, Naz Shah, Dr Eilidh Whiteford and Corri Wilson present the Bill.
Ms Tasmina Ahmed-Sheikh accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 4 December, and to be printed (Bill 85).
Welfare Reform and Work Bill (Programme No. 3)
Ordered,
That the Order of 20 July 2015 (Welfare Reform and Work Bill (Programme)) be varied as follows:
(1) Paragraphs (4) and (5) of the Order shall be omitted.
(2) Proceedings on Consideration shall be taken in the order shown in the first column of the following Table.
(3) The proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table.
Proceedings | Time for conclusion of proceedings |
|---|---|
New Clause 1; new Clause 8; amendments to Clauses 9 to 12 | Two hours after the commencement of proceedings on the motion for this order |
Remaining new Clauses and new Schedules, amendments to the remaining Clauses of the Bill, amendments to the Schedules to the Bill and remaining proceedings on Consideration | One hour before the moment of interruption on the day on which those proceedings 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.—(Guy Opperman.)
Mr Speaker
No. This is the programme motion. It is a good job the hon. Gentleman did not want to contribute, because he cannot—because it has been carried and we are moving on—but he will get his opportunity.
Welfare Reform and Work Bill
(9 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
15:04 - The House divided: - Ayes: 281 / Noes: 320 - Question accordingly negatived.
15:18 - The House divided: - Ayes: 285 / Noes: 319 - Question accordingly negatived.
18:00 - The House divided: - Ayes: 287 / Noes: 315 - Question accordingly negatived.
18:13 - The House divided: - Ayes: 284 / Noes: 315 - Question accordingly negatived.
19:00 - The House divided: - Ayes: 317 / Noes: 285 - Question accordingly agreed to.
Owen Smith (Pontypridd) (Lab)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
New clause 8—Tax credit reforms—
“The measures in this Bill and (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015 relating to the award of tax credits and the relevant entitlement within Universal Credit shall not take effect until the Secretary of State has implemented a scheme for full transitional protection for a minimum of three years for all families and individuals currently receiving tax credits before 5 April 2016, such transitional protection to be renewable after three years with parliamentary approval.”
Amendment 49, in clause 9, page 12, line 2, leave out from “relevant sums” to end of subsection and insert
“is to increase in line with the consumer price index.”
Amendment 50, page 12, line 6, leave out from “child benefit” to end of subsection and insert
“are to increase in line with the consumer price index.”
Amendment 51, page 12, line 8, leave out subsections (3) and (4).
Amendment 52, in clause 10, page 12, line 36, leave out from “relevant amounts” to end of subsection and insert
“is to increase in line with the consumer price index.”
Amendment 53, page 13, line 1, leave out clause 11.
Amendment 54, in clause 11, page 13, line 8, leave out “2017” and insert “2022”.
Amendment 55, page 13, line 31, leave out clause 12.
Owen Smith
I rise for a second time to speak to new clause 1 in my name and those of my hon. Friends the shadow Chancellor, the shadow Chief Secretary to the Treasury and my shadow Work and Pensions team. The new clause is very straightforward. It would repeal the Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015.
It is a shame that the Secretary of State for Work and Pensions is not in the Chamber to debate this important measure. I do not know what else he is doing, but he has been noticeable by his absence from the debate on tax credits in recent days. I have been to 25 studios and other arenas to debate the issue. I have looked high and low for any Minister of any stripe with whom to discuss it, and they have been noticeable by their absence. I am therefore delighted that there are three Ministers of the Crown on the Front Bench to contest the issue. That is a first in recent weeks, and I am very pleased to have this opportunity.
It is a shame that the Secretary of State for Work and Pensions is not in the Chamber. If he was here, I would have started by reminding him of something he has said in the House—indeed, he has said it on several occasions over the years—which is that he is a great believer in second chances. He has said that he believes that Britain should be
“a nation of the second chance”.
Opposition Members entirely agree with the Secretary of State. Indeed, that is one of the very few things on which I do agree with him. We should believe in second chances. I therefore say to Ministers and to the House that we have a second chance today. We have a second chance following yesterday’s vote in the House of Lords, which has called on this House to think again. In doing so, I think that the other place spoke not just for itself but for the entire country. It has asked us to think again and to give a second chance to repeal tax credits regulations that will hit so many people across this country.
In touring the studios in recent days, I have quite often heard the suggestion that the vote in the other place yesterday presaged a constitutional crisis in this country. In truth, what it did was to stop a financial crisis for the 3 million families who will be hit by the tax credits regulations when the changes are implemented next year. The message to us from the other place is quite simply to pause: for Ministers to pause before they lick the envelopes of the 3 million letters that they intend to post out at Christmas to tell such families across the country to anticipate a 10% reduction in their incomes, which is an average reduction of £1,300 for each of those 3 million working families. If the Government proposed to cut the salaries of Members of the House by 10%, there would be uproar on the Government Benches—indeed, on all Benches. Working families in this country, and people who are doing difficult low and middle-income jobs—there are 3 million of them, or more—are being told that next year they will face a 10% cut to their incomes at a stroke of a pen. It is not adequate.
Mark Spencer (Sherwood) (Con)
In 2010 the tax credit system supported people on wages in excess of £60,000. Will the hon. Gentleman say what level of income should mean that people can no longer get support through the tax credit system? How much would someone need to earn before they do not need that support?
Owen Smith
I will start with a different figure, because 5,000 of the hon. Gentleman’s constituents who will be hit by this change should ask him what he thinks is fair or just about asking them—hard-working families in his patch—to take a 10% cut to their income. That to me is the substantive issue, and the smoke and mirrors produced by the hon. Gentleman and other hon. Members about the constitutional crisis or the offsetting mitigating prospects for other changes elsewhere in the Government’s finances do not answer the central question: is it right or fair to ask hard-working families to take such a cut to their incomes?
Tax credits have changed enormously. It is untrue to say that they were simply the creation of the previous Labour Government because successive Governments have helped family or income support to evolve over many years—arguably, such measures were first introduced in this country in the 1920s and they have gone through different iterations. Different Governments have used different ways to try to do what we all believe in, which is to make work pay and keep people in work. Thresholds are flexed and levels have changed, and the amount of money we spend on tax credits has changed over time. However, it is a net positive for us as a society and for our economy to keep people in work, and this cut will diminish work incentives for the people that the hon. Gentleman and I hope to support.
Mark Spencer
The hon. Gentleman is being generous in giving way. He must recognise that the system creates circumstances in which some employees turn down promotions and overtime because that would dramatically affect their tax credits. Surely it is better to have a system where people who want to work extra hours or take a promotion would be better off if they did so.
Owen Smith
I have heard that argument a lot recently, and there is no evidence to support such a contention. It is nice to believe that were we to reduce the amount of money people have—withdraw the subsidy, as the hon. Gentleman would say—some employers would increase their payments to people and wages would go up, but I do not suggest that that is true or that any evidence supports it. Tax credits have been a necessary subsidy for low wages, and I welcome and applaud the decision by the Government to increase the national minimum wage. That is the right thing to do, which is why Labour called for it before the election—the Government could get on with it a little faster and stop spinning it as a national living wage when we know it is not, but it is a welcome step. There is no evidence to suggest that if we withdraw the subsidy at a stroke, employers will think, “I’d better put up wages for my workforce because they will struggle to survive on what they earn.”
Hywel Williams (Arfon) (PC)
Surely the answer to the first question from the hon. Member for Sherwood (Mark Spencer) is that tax credits must ensure a decent, reasonable standard of living. Such standards have been defined over many years by large numbers of people in research institutions—I will not trouble the House with those matters now, but they are well understood.
Owen Smith
Let me be clear: tax credits are a success. They have kept people in work in this country, and we have seen a shift in the volume of single parents in work.
Owen Smith
I will in a moment.
In 1997 about 43% of single parents were in work in this country, and today it is 65%. The reason for that is tax credits. Tax credits have made it possible for thousands of constituents in my patch—and in the constituencies of all Members—to stay in work despite the decline in wages.
Barbara Keeley (Worsley and Eccles South) (Lab)
My hon. Friend is rightly making a good speech about working families, but Ministers have made little mention of the impact that cuts to tax credits will have on working family carers. A carer in receipt of carers allowance who works 16 hours a week on the minimum wage and claims working tax credits will be badly hit by these cuts. Conservative Members talk about people working more hours, but those carers are already working for a minimum of 51 hours a week and they cannot work more. Does my hon. Friend believe that working carers must be protected from Government cuts, because Ministers do not even seem to recognise that issue?
Owen Smith
Yes, and if the Government are to provide us with any sort of detailed, worthwhile impact assessment, they should undertake precisely that sort of calculation. They should look at what net benefit to our economy and society is made by working mothers, carers, and those whose efforts are not being calibrated by the Government, because those people will lose out as a result of the changes to tax credits.
Helen Hayes (Dulwich and West Norwood) (Lab)
Does my hon. Friend agree that of the 7,700 families in my constituency who will lose £1,300 a year if the Government go ahead with this cut—three quarters of whom are working—those living in the private rented sector will find the cuts hardest to bear? The Government refuse to regulate that sector, and in my constituency people’s rent has risen by an average of 11.6% in the past year. The Government should consider further the punitive effects of this cut on those families.
Owen Smith
My hon. Friend is completely correct, but this cut does not affect only those who are renting and suffering from sky-high, exorbitant increases in private rent; it also affects owner-occupiers. The Government purport to speak for owner-occupiers, but those people will be proportionately harder hit by this measure than many others. Reduced eligibility for tax credits will mean that some people will receive more in housing benefit—there is an offsetting increase in housing benefit costs as a result of the decrease in eligibility for working tax credits, but owner-occupiers will not get that increase.
Earlier someone mentioned the impact of these cuts on our economy, and the self-employed will also be hard hit by these changes. Around 60% of small businesses, some 5.2 million across the country, are sole traders, and according to the Royal Society of Arts, 90% of the increase in jobs—the “jobs miracle” that the Government like to talk about—have been in self-employment in recent years.
Owen Smith
Well that may or may not be true, but it is a very large proportion. Without doubt there has been a welcome increase in employment and self-employment, but my point is that 60% of self-employed sole traders are currently eligible for tax credits.
Owen Smith
I will in a moment.
That is why the Bow Group, the Adam Smith Institute, Lord Lawson and many other respected Conservative economists think that this change is a false economy. Not only will it damage the incomes of working people; it will damage our economy. The Bow Group—which you will remember well, Mr Speaker—said that these cuts will be “devastating” for our economy.
Melanie Onn (Great Grimsby) (Lab)
An employer contacted me this week in despair because employees have been reaching out to him and asking for more hours to mitigate the loss in income from the changes to tax credits. At the same time, he has to consider reducing staff numbers to meet the requirements of the new increased minimum wage. Does my hon. Friend agree that the changes will result in reductions to household incomes, as well as job losses?
Owen Smith
I fear that may be correct, and Government’s lack of forethought, analysis and scrutiny on these measures, and the way they have tried to bowl them through both Houses in double quick time, is a measure of their fear that such analysis will reveal the fundamentally misconceived economics behind these cuts, which are unfortunately designed to make an ideological political point.
Oliver Dowden
The hon. Gentleman talks endlessly about the success of tax credits. Will he explain why spending on tax credits under the previous Labour Government rose from £6 billion to £30 billion, while at the same time in-work poverty rose by 20%? Why does he think that happened, if tax credits have been such a great success?
Owen Smith
The hon. Gentleman should start by explaining to the 3,700 constituents in his constituency who will lose out as a result of the measures for which he will no doubt vote and speak today—[Interruption.] I will answer the specific question he asks. The truth is that under the previous Labour Government, when this iteration of tax credits was introduced, the steady state amount of money we spent on tax credits was £23 billion per annum. In 2009-10, after the crisis, that went up to £30 billion. The bankers’ recession saw a spike in the necessary spending on tax credits, and it has stayed at £30 billion under his Government—another measure of this Government’s rotten economic record.
Maria Caulfield
Many of my constituents have contacted me to say that they are just above the tax credit limit and that their hard-earned taxes are subsidising low pay. What does the hon. Gentleman say to them?
Owen Smith
I would first of all say to the 3,000-odd people in the hon. Lady’s constituency of Lewes who are going to be hit by the changes that they should be ringing her up and asking her why on earth she is voting for a 10% reduction in their income. I think they would be interested to hear her justification.
Steve Rotheram (Liverpool, Walton) (Lab)
Does my hon. Friend agree that the changes are obviously a problem for some Government Members, and that they are in absolute denial about them? Does he agree that the Government’s inertia over intervention to save steel jobs and last night’s defeat in the Lords firmly put to bed the falsehood that the Tories are the party of the workers?
Owen Smith
Completely. It is one of the more risible statements I have heard from the Government. It is, once more, a measure of the contempt with which they hold certain sections of the British public that they think they can pull the wool over the eyes of people. They describe themselves, laughably, as the party of labour and the party of the workers, while they are cutting the wages of working people: 3.3 million families will be hit to the tune of £1,300; 200,000 children will be put into poverty next year, and 600,000 children over the period; and 70% of the cuts will fall on working mothers. The tax credit cuts will destroy the “economic miracle” the Tories like to talk about. Some 90% of the cuts will be devastating for the people involved. The statistics speak for themselves. After I have given way to my hon. Friend, I will describe the human impact of the cuts.
Conor McGinn (St Helens North) (Lab)
Does my hon. Friend agree that there is an inherent contradiction in the Government’s policy? The parents of a young family who came to see me in my constituency last week told me that they work hard, pay their way and are trying to do the right thing to set an example for their children. Should the Government not be supporting them, rather than punishing them?
Owen Smith
Indeed they should. I cannot understand how on earth even this Chancellor, who is pretty slipshod on occasion when it comes to analysing the impact of his measures, can have allowed this one to slip through the net. A pasty tax and a caravan tax maybe, but a £4.4 billion hit on the very workers he purports to support is truly extraordinary.
Let us look beyond the statistics for a moment. On Friday, I was out in my constituency in the village of Beddau, a former pit village at the heart of Pontypridd. Entirely by chance, I met a young woman called Kirsten who was bringing her daughter Maisie home from school. Kirsten is a nursery manager in a small private-run nursery just outside the village. She works 21 hours a week. They are all the hours available, as the nursery is open only in the morning and she works all five mornings. She then brings her daughter home from school and looks after her. She earns £611 a month. That is what she earns from her 21 hours of work at £8 an hour. That is well above the minimum wage and well above the new minimum wage we will see next year. She is set to lose £1,300 of her £7,000 earnings as a result of the cuts. That is an enormous drop for her to contemplate. She said to me that she simply did not know how she would manage. She did not understand how, without the £128 she receives in tax credits each month, she will be able to make ends meet.
I sat down with Kirsten and talked through what she needs to pay out for each month: the housing association three-bedroom house she lives in, council tax, insurance, and running her car to get back and forth to the nursery and to pick up her child. There is nothing left over. The £128 she spends from the tax credits she rightly receives pays for food, new clothes and her child’s books for school. It is just beyond the ken of ordinary people that the Government could be asking them to pay the price for the bankers’ recession, which has led to the crisis in our economy and a Tory Government cutting the incomes of working people.
Ian Lavery (Wansbeck) (Lab)
Does my hon. Friend agree, when the issue of family tax credits is all boiled down and the arguments have been fine-tuned, that this is simply an ideological attack by the Government on the lowest paid in our communities? Does he agree with the Institute for Fiscal Studies, which says that low-paid people are being specifically targeted?
Owen Smith
I completely agree. It is extraordinary for the Government to describe tax credits as “a bribe”. That is how successive Ministers, including the missing Secretary of State for Work and Pensions, have gone out of their way to describe tax credits for working people. They do not talk about protecting pensioners’ benefits as a bribe by the Conservative party to pensioners—and I would never say that; it is entirely just to protect pensioners’ benefits. By describing tax credits as a bribe, they are even seeking to demonise working people on low and middle incomes who are doing the right thing. That is entirely wrong.
Helen Whately (Faversham and Mid Kent) (Con)
I am listening carefully and I hear a great deal of criticism. What I have not heard from Labour Members are proposals on how welfare should be put on a more sustainable footing, on how they would like to see work pay, and on how they would reduce the deficit and the debt. Are they instead proposing cuts to public services?
Owen Smith
No, obviously I am not suggesting that for a minute. That is a nonsense thing to say. Let me walk through what the Government are proposing.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Does my hon. Friend share my concern that under the coalition Government the projected savings that were meant to come from changes to housing benefit and employment and support allowance never materialised? Savings of £10 billion were not made by the previous Government. Perhaps Government Members should be challenging their Secretary of State and calling for his resignation.
Owen Smith
Of course they should. If they had any guts they would do precisely that. There has been an abject failure on housing benefit. The bill has gone up and up and up. If the Bill is passed—I sincerely hope it does not pass after yesterday evening’s decision—housing benefit spending will go up some more. We know the Government have failed on that and they will continue to fail in the future.
Let us look, for a moment—
Owen Smith
I have given way once. I will move on and give way again in a moment.
Mr David Anderson (Blaydon) (Lab)
My hon. Friend the Member for Wansbeck (Ian Lavery) mentioned the word “bribe”. Is not the real bribe in the Bill the bribe that will be given to the children of dead millionaires through the changes to inheritance tax, to the detriment of the people who will be hit by tax credit cuts?
Owen Smith
I am glad I gave way, because my hon. Friend makes the excellent point that politics is always a choice. Politics is about priorities. Politics is about who we stand up for, who we speak for and whose side we are on. It is very, very clear that, in the Bill and in this House, the Conservative party is on the side of millionaires and the wealthy, and are standing up against the ordinary working people of Britain, who will not forgive them for doing so.
Paul Scully (Sutton and Cheam) (Con)
The hon. Gentleman talks about choices, and spoke earlier about a £4.4 billion hit. Is he proposing, instead, a £4.4 billion subsidy for the large companies that Labour Members continue to criticise on a daily basis to cover the shortfall in wages that they should be paying?
Owen Smith
No, I am talking about £4.4 billion-worth of support that is offered to working people in this country, including 3,800 in the hon. Gentleman’s constituency. He has a choice to make on their behalf today. Is he going to stand up for them? Is he going to speak for those almost 4,000 families in his constituency, or is he going to roll over and vote with the Government to cut their wages by 10%? That is the choice he faces, and it is a very real political choice for him. As he is a new Member, he should think very carefully about that.
Let us deal with what the Government are proposing by way of mitigation. We heard a lot from the Chancellor yesterday evening. He looked a little ratty as he told the cameras that he was going to think again—he was obviously not very keen on having to do it—but there was at least some hint that there would be transitional measures. We have had hints over recent days as to what they might be. Let me run through a few of them and put the Government on notice that we will scrutinise extremely carefully, as we have done today, the net impact of any such measures.
First, there is the minimum wage. It is welcome that the Government propose to increase it from £6.50 to £7.20 next year and thereafter to get it up to £9.20 by 2020—it is a good measure. Unfortunately, however, even if the Government were to take it to £9.20 on 1 April—the day on which tax credit cuts are introduced—it would not offset the losses for average families, not by a long chalk. Most families on 40 hours a week with one parent earning would, if they were earning around £15,000, still lose £600 a year. The minimum wage increase is clearly not going to offset the losses.
The second element that has been talked about is childcare allowance. Even if the Government were to move straight away to the proposed 30 hours a week for England—again, a welcome measure, although it looks rather under-resourced to me, given that we were told it would cost us over £1 billion if we were to implement it and the Government are planning to invest around £300,000; we will see what happens with that—that same family, banking the £9 minimum wage, would still be around £500 worse off.
Let us build in the third element, which is of course the increase in the personal allowance. The Government have made other welcome measures in increasing the personal income tax allowance from £6,500 to £11,000 and they are talking about taking it up to £12,500 at the end of this Parliament. Again, that is a welcome measure, but it misses the target. Those people who earn between £3,500 and £12,500 will all be worse off if the Government start taking away their tax credit entitlement. They are two different tribes. It is completely fallacious to suggest that if we give extra money by increasing the personal allowance or the national minimum wage, we will offset the losses. Only 25% of the losses will be offset by the national minimum wage and only for 25% of the population. It is very straightforwardly a con. As we heard in the excellent evidence session before Thursday’s debate, the Resolution Foundation said very clearly that if we need to deal with the question of tax credits, the answer is, unfortunately, tax credits.
Steve Rotheram
Does my hon. Friend agree that the 6,700 families that will lose out from the tax credit cuts to their incomes will not be compensated, and that it is arithmetically impossible that the Government’s proposed changes would do that?
Owen Smith
There is no need to take just my word for that; it is precisely what Paul Johnson of the Institute for Fiscal Studies said—that it is arithmetically impossible for the Government’s offsets, which I have just listed, to compensate for the losses that these hard-working families in all our constituencies are going to face. The Government know that that is true, which is why they have been so absent from the television studios in recent days. They do not need to hear the truth from me: they know it.
Tom Brake (Carshalton and Wallington) (LD)
On the issue of offsetting losses, the hon. Gentleman will be aware that in my constituency, for example, 4,000 families will be affected, losing £1,000 each, which amounts to £4 million being taken out of the local economy. Has he considered the impacts of that?
Owen Smith
I have considered the impacts. I think that reducing aggregate demand by taking money out of the pockets of working families—the people with the highest propensity to spend money locally in the economy—is a foolish thing to do. It is a false economy. We know that to be true economically, so why on earth would the Government want to do it?
Barbara Keeley
I want to add a little detail. Conservative Members seem to be raising the cases of people who do not benefit from working tax credit and are questioning it on that basis. Perhaps the example I quoted earlier will help. The carer on carer’s allowance will get £62 and is able to earn a maximum of £110, which is a disregard. That is what carers are on, and they will be hit very hard by the loss of working tax credit. These people are earning a maximum of only £172. The important point is that there are 689,000 such people—those wonderful carers committed to looking after family members. Only one Conservative Member seems to have recognised that issue, which is a massive one. It is not quite as massive as the 3 million families affected, but it is still important. Ministers need to reflect on and explain why they are doing this to 689,000 carers up and down the country.
Owen Smith
Why on earth have the Government not conducted any sort of analysis to illustrate the benefits to our society and economy that those 700,000 carers are contributing? We all know in our hearts that they are making an enormous contribution, and we all know in our heads that they are precisely the people who are going to lose out. It is working mothers, carers and people who cannot expand their hours who are going to lose money, but they are doing the right thing; they are in work, striving hard. They might well be better off if they were not, and the crazy thing about the Bill is that in future they will be better off not working so hard. The work penalty and the disincentive to engage in extra hours and work harder, even once people have a higher than minimum wage, is screaming out at the heart of the Bill. It is a fundamental economic error, and it is being done for ideological purposes. The Tories are seeking to present those people—working people—as scroungers, and they are trying to present tax credits as benefits and a bribe.
Dr Andrew Murrison (South West Wiltshire) (Con)
Will the hon. Gentleman give way?
Owen Smith
I will not—I have already given way a lot—but I will quote to Conservative Members some of their own people, who have recognised how mistaken this policy is. Let us take Lord Lawson, for example—hardly a bleeding-heart liberal, and someone I remember standing next to Mrs Thatcher during those dog days for my part of the world when the pits closed in south Wales. Lord Lawson referred in the other place yesterday to
“the great harm, or a great deal of the harm”,
being done “at the lowest end”. He continued:
“That is what needs to be looked at again; that is what concerns me.”
He said that the Chancellor would, of course,
“listen to this debate, but it is not just listening that is required. Change is required.”—[Official Report, House of Lords, 26 October 2015; Vol. 765, c. 1005.]
Let me also cite the hon. Member for South Cambridgeshire (Heidi Allen), who I thought spoke brilliantly, eloquently and forcefully last week. I shall quote just one part of her speech. She said:
“To pull ourselves out of debt, we should not be forcing those working families into it.”—[Official Report, 20 October 2015; Vol. 600, c. 876.]
We should not be forcing working families into debt to deal with the debt that the country has been left by the bankers’ recession and the failure of the Tory Government to fix it.
Oliver Dowden
The hon. Gentleman has still not answered a very simple question. If this measure saves more than £4 billion, how will the Labour party find that money? Will it cut spending on other measures such as health and education, will it increase taxes, or will it increase borrowing? There are only three options. Which one will the hon. Gentleman choose?
Owen Smith
I repeat that the hon. Gentleman should really answer the question asked by the 3,700 people in his constituency who will lose out if he votes with the Government today.
Neil Coyle
The National Audit Office has suggested that as a result of the incompetence of the coalition Government and the Secretary of State for Work and Pensions, £140 million was wasted on the early stages of universal credit. Is my hon. Friend aware that that could have helped 108,000 people who are now being punished for that failure and face the withdrawal of tax credits, or 21,500 people over the course of the current Parliament? Should the money not have been better spent?
Owen Smith
That is a brilliant point, and extremely well made. There are myriad examples of waste and incompetence in the handling of our DWP budget under this Government, not least the enormous increase in housing benefit.
Ms Karen Buck (Westminster North) (Lab)
Does the Conservative party not fail to understand what tax credits are all about? The tax credit policy was successful in that it moved people into work, and, in particular, underpinned the major progress that was made when single parents were allowed to move into work. When we talk about saving money, should we not see that in the context of the tax credit policy’s success in moving people from worklessness into sustainable employment?
Owen Smith
My hon. Friend speaks with enormous experience and expertise, and she is completely right. As I said earlier, tax credits are a policy success. In 1997, 43% of single parents in Britain went out to work; today, the figure is 65%. There has been a 50% increase in the number of single parents who are in work, and that is a measure of the success of tax credits.
Owen Smith
I will give way in a moment to the hon. Gentleman, who represents a great city—a working-class city—but before I do so, I ask him to reflect on the views of one of his colleagues, the hon. Member for Plymouth, Moor View (Johnny Mercer), who said last week that
“it would be remiss of me not to recount the extraordinary levels of feeling in Plymouth last weekend. This bright, vibrant, exciting and…blue collar city, where in the last general election we saw lots of new and first-time Conservative voters, has serious objections to the tax credit reforms.” —[Official Report, 20 October 2015; Vol. 600, c.882.]
The hon. Gentleman knows, and I know, that that stands for his constituency in Cardiff too, and I hope he will reflect on it when he addresses the House.
Craig Williams
The hon. Gentleman has talked about policy success. Cardiff truly is a working people’s city. Will he comment—so far, he has not done so—on the Government’s leadership on the national living wage? What would he say to the staff of Morrisons, Costa Coffee, Sainsbury’s, Lidl, British Gas and IKEA, who are already benefiting from those companies’ attempts to follow the lead taken by this Conservative Government and match the living wage?
Owen Smith
I know that the hon. Gentleman is relatively new to the House, but he really ought to be present for the beginning of debates. I said at the start of my speech, and indeed on two other occasions, that I welcomed the Government’s moves. I applaud them for what they are doing in increasing the national minimum wage, although I repeat that it is utterly bogus to describe it as a national living wage. It is not a national living wage, which is why the Living Wage Foundation will not describe it as such. I wish that the Government would give us a true national living wage, in London and elsewhere.
The hon. Gentleman has, in his wealthy, leafy part of Cardiff, more than 3,000 constituents who benefit from tax credits. I ask him to look into his heart and reflect on whether it is right, for whatever purpose—ideological or economic—to ask those hard-working families to pay this bill. It is not fair, it is not just, and I do not think that it should go ahead.
Dr Murrison
I am listening carefully to what the hon. Gentleman has to say. I would be extremely sympathetic to a credible case based on proper transitional arrangements and mitigation, but, as I am sure Lord Lawson would admit, it has to be paid for. I wonder whether the hon. Gentleman can shed any light on how we can close the gap in relation to the £4 billion that has been cited. All that I have heard from him so far is polemic; I have not heard any credible proposal that would enable us to square the finances.
Owen Smith
The hon. Gentleman could, of course, start by deciding not to do what the Government did this week when they offered an inheritance tax cut for properties worth more than £1 million. That would provide about £1 billion. He could decide to reverse the 50p tax rate cut for millionaires; that would provide another £3 billion. He could choose to do what the Chancellor has already chosen to do in the past, and delay the point at which the Government get the budget into surplus. He has moved the goalposts once; why does he not do it again? He is very good at it. He has practised. He has already had one crack at it.
Ian Lavery
My hon. Friend has been asked numerous times what the Labour party would do about the £4.2 billion. Will he now explain, categorically and in the simplest terms, that we would not do what the Government are doing, which is taking £4.2 billion from the lowest paid in society? People are losing £1,300 a year, and 200,000 kids are being pushed into poverty. That is not what we are going to do.
Owen Smith
I am delighted to say that I agree 100% with my hon. Friend. Let me be really clear: our view today is that the Government should repeal these measures. Our view is that it is wrong to seek to balance the books, in this or any country, on the back of the working poor—those with low and middle incomes who are doing the right thing. This is the wrong thing to do, and we will not do it.
Let me end by reflecting a little on what this whole unedifying spectacle means for the public, and to the public. I think we can agree that politics has been held in pretty low esteem in this country in recent years. People feel that we, as a political class, are not straight with them. They feel that we do not keep our word, or say what we mean.
Owen Smith
I will not give way again.
The problem with this change is that it will simply compound that fundamental mistrust. Before the last election, the Prime Minister said, on live national television, that he was not going to cut child tax credits, but he is going to do so. That was a fundamental misleading of the British public. Other Ministers also made categorical statements. When asked whether the Conservative party would cut tax credits, one of them said:
“"No; we are going to freeze them for two years; we are not going to cut them.”
That was a fundamental untruth, and the country knows it.
Unfortunately, when that is added to the Government’s smoke and mirrors and what they say about how they intend to offset the impact of these cuts, it is clear that we as a group—and the Conservatives as a political party—are deepening what is already a profound mistrust in our politics. For the Conservatives to describe themselves as the workers’ party is laughable. Theirs is the party that is cutting the incomes of the workers of Britain, and they should be ashamed of that. They should stand up today and vote with us for new clause 1, and repeal the tax credit cuts.
John Redwood (Wokingham) (Con)
Prosperity, not austerity: that is what we want. My consistent advice to Ministers dealing with economic matters and benefits is that they should always have at the forefront of their minds the need for everything they do to promote less austerity and more prosperity for the many, because we wish to have a more prosperous people. The outlines of how we do that are clear, and I fully support the Government’s vision and objectives.
The first thing to do is promote work. We need to make sure that people come out of unemployment and into work; that people who are working part-time but want to work full-time have the opportunity to go on to work full-time; and that people in full-time work that is not well paid have the chance to be promoted into a better-paid job, and to get better skills and training and work with their employer so that they can have a more productive and better-paid job. In that area, this Government and the predecessor coalition have been so much more successful than the Labour Government of 2005 to 2010. We know how austerity for the many is created: by following the Labour Government’s policies of 2005 to 2010, when they increased borrowing and spending, and combined that with over-lax regulation of bank capital and cash, which I warned them about prior to the crunch. When they put those three things in a heady mix, they brought the economy down, a large number of people lost their job altogether, a large number had to take a pay cut to keep their job and most people lost their bonuses or their opportunities to work overtime because the great recession that was unleashed on this country did so much damage. The first thing, therefore, that the British people want is to be secure in the knowledge that the economic policies being used are prudent and sensible, so that there is more chance of more people working and of people having better- paid jobs.
Ms Buck
The right hon. Gentleman makes a good point about the importance of allowing people to keep more of their money when they work longer hours. How does he square that commitment with the fact that the changes coming in next April will increase the tapers on higher earnings so that people will be subject to 80p in the pound withdrawal rates when they do work extra hours?
John Redwood
The problem with welfare reform, as all who have wrestled with it well know, is that we either have a large number of people facing a moderate rate of withdrawal or we have a more limited number of people facing a high rate of withdrawal. All the time that we have means-tested benefits—our system is still riddled with them—means that we will have to make that difficult choice about whether there is a fast move off benefit when people’s income goes up or a slower move. That will mean we either have fewer or more people affected by the taper. Labour never solved the problem of the taper. The Labour Government had lots of difficult tapers and high marginal rates of tax and benefit withdrawal.
That brings me to the second fundamental pillar of the Government’s strategy, which I support, after the promotion of work and better-paid work: taxing people less, particularly those on lower incomes. Both the coalition and this Government have worked away at that, by trying to get more people out of paying income tax. As my right hon. Friend the Chancellor thinks about his pre-Budget judgment and his autumn statement judgment later this year—he is rightly in listening mode—I trust he will think about the tax element in his policy mix, because the more he can do to take people out of tax or to lower the tax rate upon them, the more he will succeed in promoting prosperity and the more he will offset the impact of benefit changes.
Hywel Williams
The right hon. Gentleman talks about prosperity, but he will know as well as I do that small businesses are one of the chief drivers of it. How does he square that with the cuts to small businesses and single earners’ income from their self-employment?
John Redwood
The Government are trying to encourage people to earn more in self-employment—that is the whole point of the policy. The idea is to create better incentives so that it is worth while people working more and longer hours if they have not had sufficient hours of work and not a sufficient income, and they keep more of the money they make by being in self-employment. That is true for them as well as for people in employment.
John Redwood
The hon. Gentleman has had one go and I am sorry he messed up his question.
Barbara Keeley
I have raised in this Chamber a number of times the issue of the almost 700,000 carers who are working but can work only 16 hours at the minimum wage. Many Conservative Members in this debate and in earlier debates have talked about people increasing their hours, but some sets of people cannot increase their hours—my Front-Bench colleague the hon. Friend the Member for Pontypridd (Owen Smith) has mentioned them and I mention them. What does the right hon. Gentleman say to almost 700,000 working carers who cannot give themselves more hours, are not allowed to earn more than £110 a week and will be hit badly by this cut to working tax credits?
John Redwood
Yes, some people cannot increase their hours or, for good reason, do not want to increase them because they are already working long hours. I have already described the actions they or their employers can take, and that the Government can encourage. We want these people to have better opportunity and more skill, and to work with their employers to raise productivity to justify pay rises. The Government, with the full support of the Opposition, are using the force of the law to increase minimum wages, as part of the policy of driving wages upwards. But the only way we can succeed in getting wages in this country up to levels we would all find acceptable is through a productivity revolution. It has to come by working smarter and better, not necessarily by working longer hours or by working harder, with the right investment and the right back-up from employers, so that people can earn more and justify higher earnings.
Owen Smith
Does the right hon. Gentleman accept that we are talking about two tribes here? It is not necessarily people who are on working tax credits who are on the minimum wage—indeed, the overlap is only about 25%, so an increase in the minimum wage will miss 75% of those tax credit recipients.
John Redwood
I do not think it is very nice to say that people belong to “tribes”; we are in one country and we are trying to promote the greater prosperity of the many. I am surprised by that lapse of language, but the hon. Gentleman is right to say that some people who will face a reduction in tax credits are not going to benefit from the minimum wage because they are already earning more than that. That is clearly true.
John Redwood
If the hon. Gentleman would listen carefully, he would know that that is why I say I support a strategy for prosperity that first promotes more people into better pay. I am not just talking about those who are currently on a low wage; I want someone on a better wage also to have the opportunity for more pay. Some of my constituents do; they will be promoted, they will work for smart employers in smarter ways, and they will get pay rises, although not all will. The more the Government can do to help, encourage and support, so that many more people can get those opportunities of better pay, the more we will like it. I hope the Opposition parties will agree that that is the best way to greater prosperity. It is also the best way to better jobs. If someone goes to work every day thinking that next year they might have a better job, a pay rise or a bonus they can benefit from, they will go with more of a spring in their step than if they are going to a low-paid job with a bad employer who is not giving them any options and not giving them a break in life. [Interruption.] I see that some Opposition Members think that that is a funny idea, but I hope they would join me in recommending this approach to employers in their constituency as well as in mine, as that is how we create a more prosperous society. I am just trying to stress that we also need to get taxes down.
That deals with the second pillar of this excellent strategy. We need better work and more better-paid work, and less tax on that work so that people are more prosperous. We then come to the difficult bit, which is the point of the row today, all of last week and probably all of next week, by the looks of how Parliament is going at the moment. The issue is: at what rate do you withdraw the benefits support as people become more prosperous because they are in work, not out of work, because they are in better-paid work and because they are paying less tax? There are difficult judgments to be made, and I am very pleased that my right hon. Friend the Chancellor is in listening mode. I look forward to his autumn statement—unlike the Labour party, I will be looking at all three elements of the package. I will be looking at pay and tax, as well as benefit withdrawal.
Perhaps unlike Labour, I want to end up in a world where far fewer people are on benefits, because their pay and the tax cuts are sufficient to give them a better lifestyle. We will then have a more affordable welfare system that enables us to run an economic policy more likely to deliver better prospects, more jobs and more success for business. As some of my Conservative colleagues have sought to point out, the problem the Opposition face is that no answer is coming from them. We know that they were able to overspend, over-borrow and crash the economy. We are now waiting to hear from them about how they would get the money under control, were they to be trusted again with government. We know that they do not want to cut non-benefit expenditure, so surely they have to accept the case I am making: that we need to get more people out of benefits altogether, and that requires a combination of the good things—promoting work, promoting better pay and lower taxes—and the not-so-good things, such as actually having to make some difficult choices on benefits.
Naz Shah (Bradford West) (Lab)
What answer do I give my constituents? They have a spring in their step because they are getting all these promotions and things the right hon. Gentleman talks about, yet 34,000 children in my constituency who are on tax credits will be thrown into poverty. Can he explain that?
John Redwood
We have just been talking about how we can avoid that. We have been talking about how we can get those people out of poverty and into prosperity and how we can promote, in the hon. Lady’s constituency and elsewhere, more jobs, better businesses and lower taxes, which must be the medium to long-term answer.
Owen Smith
I am grateful to the right hon. Gentleman, who is being gracious in giving way. He talks about us all wanting to avoid a disincentive to work extra hours, but does he not accept that that disincentive will be increased by reducing the lower earnings threshold and increasing the taper, thereby increasing the amount of money that is taken away for every extra hour worked and every extra pound earned?
John Redwood
I have already been quite honest in saying that Governments face a difficult choice in this regard: do they want fewer people facing a sharper taper, or more people facing a gentler taper? There are no easy answers. I look forward to hearing the Government’s judgment when they have completed their listening and thinking. Again, the Opposition are refusing to see all three parts of the package. It is not possible to answer the hon. Gentleman’s question as simply as he would like, because working out whether people are better off or worse off, and by how much, depends on what else happens with taxation, rates of pay, inflation and all the other things that are going on.
My advice to the Government is that their strategy is absolutely right: get more from pay, more from tax cuts and then cut the benefits, because people will not need them as much. They must listen carefully to criticisms, for example if their changes are going too far and too fast, or if they catch some people we do not want to catch. I am sure that my right hon. Friend the Chancellor will want to return to those points in his autumn statement and tell us his thinking. However, the direction of travel must not be simply to make big increases in benefits again; it must be to find other answers so that more people can enjoy prosperity from work, earnings and lower taxes.
Helen Hayes
I wonder whether the right hon. Gentleman would like to comment on two issues. First, is there any legitimacy or authority in the Government’s approach to cutting tax credits, given that the Prime Minister repeatedly denied that he would do so in the run-up to the general election? Secondly, there is unequivocal evidence from the Institute for Fiscal Studies and others that the maths on the issue simply do not add up, and that asking people to work harder for less is, quite simply, an unacceptable proposition.
John Redwood
I agree with the hon. Lady’s latter point, because I do not want people to have to work harder for less. I have just described the world I want to live in, and how I want that world, which some of my constituents enjoy, to be available to many more. I want people to work smarter and with more skill so that they can earn more because their companies can afford to pay them more. With regard to the Prime Minister’s promise in the run-up to the general election, I heard him rule out cutting child benefit, and I understand that there are no proposals to cut child benefit.
When I was asked about welfare in the run-up to the general election, I made it clear that I wanted the total welfare bill to come down and that I expected to see welfare reform, including some reductions in welfare payments and eligibility. Personally, I do not think that I have anything to answer on that score. I was entirely honest with my electorate, and they kindly trusted me with the job again, and with a bigger majority. There are many people in this country with a grown-up view about welfare, who do not want it to penalise those who really need it but who think it is high time we reformed it so that we depend much more on work and tax reduction on lower and middle levels of pay than we have done in the past.
Therefore, I urge my right hon. Friend the Chancellor the preserve the spirit of his reforms but to look very carefully at the detail, because we do not want to see bad cases of the type that Opposition Members have been conjuring out of thin air without proper facts. Above all, we do not want to go back to Labour’s boom-and-bust economy, where generous welfare, far from creating more jobs and prosperity, helped bring the whole thing down.
Neil Gray (Airdrie and Shotts) (SNP)
I rise to speak to the amendments in this group tabled by the Scottish National party. We also support new clause 1, which the shadow Minister moved earlier. Let me pay tribute at this stage to the efforts of my hon. Friends the Members for Ayr, Carrick and Cumnock (Corri Wilson) and for Livingston (Hannah Bardell) who worked so assiduously on the Bill Committee on behalf of the SNP, and to my hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) for her work on these matters in the Work and Pensions Committee.
My wife has always suggested to me that it provides context and depth to a speech if it includes a quote early on. On this occasion, and in relation to tax credit cuts, I have a quote that was timeously delivered in the past few days:
“It’s not acceptable. The aim is sound, but we can’t have people suffering on the way… The idea that there’s a cliff edge in April before the uptake in wages comes in is a real practical human problem and the Government needs to look again at it again”.
Who is that quote attributed to? That was said by Ruth Davidson MSP, leader of the Conservative party in Scotland, as she called on this Government to have some movement on the issue by the autumn statement.
After last night’s vote in the other place, it is time for the Government to rethink these outrageous proposals. They have managed to unite a considerable swathe of political and civic society against the plans. In fact, after last night the Chancellor really stands alone in continuing to push for the cuts. If the Chancellor, the Prime Minister and this Government will not listen to Opposition Members, if they will not listen to charitable and third sector organisations, and if they will not listen to anyone else, surely they should listen to the leader of their own party in Scotland.
The SNP is completely opposed to the UK Government’s continued attack on low-income families, and we support Labour’s amendment to repeal the regulations, which will affect 350,000 children in 200,000 families in Scotland. Let me say this loud and clear: the SNP will oppose these ideological, regressive and utterly punitive tax credit cuts with every opportunity open to us today and every day, because we realise the damage they will cause to working family incomes, to levels of poverty across these isles, including child poverty, and to social cohesion in every community in the United Kingdom.
The amendments that my colleagues and I support in this group would bring about the repeal of these tax credit regulations and overturn the proposed cuts. However, should the Government decide to press on with the cuts in the face of hostility across this Chamber, and from Conservatives up the road, they must consider forms of mitigation. They must act to protect vulnerable families with a delay and a fully implemented transitional period, as is covered in our new clause 8, which we will be pushing to a vote. In the light of last night’s vote in the other place, I expect that is already being considered by the Government.
New clause 8 would mean that the measures in the Bill and in the 2015 tax credits regulations relating to the award of tax credits and the relevant entitlement within universal credit would not take effect until the Secretary of State had implemented a scheme for full transitional protection for a minimum of three years for all families and individuals currently receiving tax credits before 5 April 2016, and such transitional protection should be renewable after three years with parliamentary approval.
The transitional arrangements are important, as none are put in place by the Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015. This means that the tax credit cuts will be implemented immediately in April 2016. In fact, tax credit recipients will apparently be getting an unwelcome letter detailing the cuts to their award just weeks before Christmas. This will give working families no time to plan effectively for an average cut of £1,300. For families living wage packet to wage packet, utterly dependent on tax credits to keep them above the breadline, the cut will be devastating and impossible to plan for in such a short time.
Amendments 49, 50 and 52 would ensure that relevant benefits, child benefit and tax credits increased in line with the consumer prices index. Amendment 51 is consequential, while amendments 53 and 54 would ensure that the current child tax credit arrangements remained in place. Amendment 55 would remove changes to the entitlement to the child element of universal credit. These amendments were pushed by my colleagues in Committee. The Government did not accept any of them, but they pledged to come back with more information, which has not yet materialised.
Why on earth have the Government decided to rush the Bill from Committee, which only finished on Thursday, to this final stage today? If they are serious about introducing more detail and explaining the expected mitigation measures, why not flesh that out? The rush suggests that the cuts are purely about making savings and therefore ideologically driven. The changes are fundamentally regressive. They disproportionately target those in low-income households and punish them for the Government’s ideological obsession with austerity—an obsession that is failing socially and economically.
The SNP stood on a manifesto that was fundamentally anti-austerity but which also plotted a more responsible path to reducing the deficit. We have argued for a 0.5% increase in departmental spending per year for this Parliament, which would have released £140 billion to invest in capital projects to boost growth and narrow income inequalities. Our plan would also have resulted in a budget deficit of just 2% by the end of the Parliament, and it was backed by an International Monetary Fund report in June that highlighted how reducing income inequality not only reduced poverty but boosted growth. By extension, the policy of cutting tax credits and thereby increasing income inequality will drive more of our citizens into poverty and harm growth and therefore harm the Government’s apparent aim of reducing the deficit. So, as well as being socially destructive, this policy is—to extend the IMF’s thinking—economically incompetent.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
Does my hon. Friend agree that the SNP has come up with a responsible approach to delivering sustainable growth that will drive up wages and employment, by contrast with what the Government have done over the past five years and what we see going forward? The Bank of England, with its £375 billion of quantitative easing, has had to bail them out with monetary policy because, quite simply, they have not delivered on fiscal policy.
Neil Gray
I welcome my hon. Friend’s contribution. As we are talking about affordability and sustainability, let me say that the Government think it feasible to press ahead with apparently £167 billion of Trident nuclear weapons, which is shocking and deplorable, while seeing fit to find £4.4 billion of cuts in tax credits. They are taking an ideological wrecking ball to our social security system in the name of a budget surplus by scandalously waging a war on low-income households.
Paul Scully
Does the hon. Gentleman agree that the cost of Trident is over the lifetime of the project, whereas he is talking about an annual savings figure?
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. At last, Members have risen to show that they want to speak. It is very confusing for the Chair if you do not stand up at the beginning of the debate, because I cannot tell how many people wish to speak. At the moment, I can see approximately eight people—
Madam Deputy Speaker
You see! Why can’t people just stand up? It is not difficult. Schoolchildren do it. Just stand up when you want to speak! I can now see a significant number of people wishing to speak. I cannot impose a time limit at this stage in the proceedings, but we have less than half an hour left in this debate, so I appeal for brevity: perhaps three or four minutes.
Oliver Dowden
I shall speak briefly against new clause 1. We as a nation need to be clear about the scale of the challenge that we face. The budget deficit has been halved, but it is still enormous and we are spending far more than we earn. Against that backdrop, the increase in welfare spending is an important element that must be addressed. The amount of spending on tax credits has risen from £6 billion when Gordon Brown first introduced them to £30 billion now. That money is being borrowed in order to pay for welfare. I do not think that borrowing money to pay for welfare expenditure is a sensible idea.
Catherine West (Hornsey and Wood Green) (Lab)
Let us look at the totality of welfare spending as though it were a cake. Is it not the case that the failure of the Government over the past five years to address the high cost of housing or to bring down the housing benefit bill is the key to solving your problem?
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. It is not my problem. It is somebody else’s problem.
Oliver Dowden
We need to be clear about the problems with tax credits. Let me offer the House three facts. The first is that, under the last Labour Government, 1.4 million people remained on out-of-work benefits for almost the entire period. Secondly, the number of workless households doubled, and thirdly, the level of in-work poverty rose by 20%. So there has been a massive increase in expenditure on welfare and on tax credits, but it is not delivering the reduction in poverty that we all desire.
Neil Coyle
Does the hon. Gentleman not agree that tax credits have played a role in tackling in-work poverty?
Oliver Dowden
This is precisely the point that I would like to get on to. Despite the increased expenditure on tax credits, we continue to see these dreadful statistics on poverty, and that is because this is a flawed model that is based on taxing people on the minimum wage who can barely afford to pay tax, recycling that revenue through the welfare system and using it to top up low pay. That is not a sensible way to proceed.
Oliver Dowden
I will give way once more, but I am aware of Madam Deputy Speaker’s injunction.
Ian Blackford
We understand, from survey after survey, that millions of people in this country are going to be worse off as a result of these measures. What is the hon. Gentleman going to say to his constituents who come to him after next April having lost on average £1,300 of their income?
Oliver Dowden
I would say to those people that this Government have a clear and coherent plan for helping people on the lowest incomes that consists of three elements. The first is to increase the amount of money people can earn without paying any tax; by the end of this Parliament that will be increased to £12,500. That is lifting people working 35 hours a week on the minimum wage out of tax entirely. Secondly, we are introducing a national living wage which by the end of this Parliament will increase wages to £9 an hour. Thirdly, we are introducing a number of other measures such as free childcare which will help those in most need of it. That is a far better model—to move from a low-wage economy with high tax and high welfare to a higher wage, lower welfare and lower tax model.
Sammy Wilson
We will be supporting the new clause—not because we are opposed to all welfare reform. Our voting record in this House and the fact that against the odds we have tried to drive through sensible welfare reform changes in Northern Ireland indicates that we do not take the blanket view that welfare reform is bad, full stop. Some of it is necessary, but some of it is wrong-headed, and this change is wrong-headed for a number of reasons.
First, I do not believe that the proposals will achieve what the Government want. We hear time and again—we have heard it today—that the Government want to make work pay and that those who go out every day to employment must have a reward for that and there must be an incentive. All the indications and assessments are that these proposals, because of their timing and their scale, will not make work pay. In fact, the OBR has said they will be a disincentive to work, because the rewards are being taken away from people but the mitigation will not be added quickly enough. Therefore, the objectives that the Government are setting out to achieve will not be achieved.
The second point is that in most cases we are not dealing with people who have a large buffer either of savings or additional income which can help them overcome the timing difficulty. We are talking about people on low wages and probably every penny that they earn goes on their living expenses. We have heard again today that as the tax credits come off, there will be tax cuts, additional childcare support and reductions in rent, and that all those things will mitigate the changes—and that on top of that there will be an increase in the national living wage. However, the tax credit cuts are coming in immediately, whereas the other things will be brought in over a period of time.
Catherine West
Does the hon. Gentleman agree that one way of bringing down the entirety of the welfare bill is to build more homes, so that we do not spend £60 billion in a Parliament on housing benefit?
Sammy Wilson
I agree, although that is not a short-term answer either. That is a long-term answer and it is certainly not going to deal with the issue facing us today.
The tax reductions will not affect all the people who are on low wages because they will not all hit the threshold. The childcare changes will affect only a fifth of the people whose tax credits will be cut. The national living wage increases will not apply, for example, to people under 25. So there is a whole swathe of the population who will not benefit from the other changes. Many of them will have families as well, of course. The Chancellor has said that the principal way in which the issue will be addressed is an increase in the national living wage, yet a whole swathe of the population will not be affected by that. For that reason, many people will be worse off. Even when all the changes are added together—the tax credits being removed, the tax thresholds being increased, the childcare element, the housing element, which does not apply to people in the private rented sector of course, and the national living wage—it is estimated that people will still find themselves on average a third worse off. This will affect many of our constituents.
Conservative Members should be very thankful that those in the House of Lords swapped their red Benches for red flags last night. That has probably done the Conservative party a favour. Many of the people who will be affected by these changes are the natural supporters of the Conservative party; they are the strivers of society, the people who want to do better, who want to improve themselves, and who probably look to some of the Government’s other policies. They will be hit hardest. I suspect that the Government have got off the hook, therefore.
The Government’s measures should be overturned by the House tonight and the Government should have a complete rethink. If they are serious about having a rethink, they should be supporting the amendments, to enable a radical rethink rather than a tinkering with the policy, which will be detrimental.
This question is rightly asked: what is the alternative? There are many alternatives. The changes represent less than 1% of total Government spending. Surely to goodness across Departments two thirds of 1% in savings can be found to finance dropping the changes. Over the life of this Parliament we can then work towards a sensible rebalancing, where employers pay proper wages and the state has to pay less in subsidies.
Suella Fernandes (Fareham) (Con)
We all share a belief in the welfare state, and in a civilised country like ours it is right that we offer help to the most needy, but the amendments are myopic and ill thought out because they forget about sustainability and fairness. Our welfare system is immensely unfair in its discrepancies. The clauses that would be amended—clauses 9 and 10—together freeze the main rates of most working age benefits, child benefit and certain elements of working tax credit and child tax credit for four years, starting from 2016-17, with important exemptions to protect the vulnerable, such as pensioners and those who are disabled, reflecting compassion and proportion.
Why are we doing that? Because since 2008 wages have risen by 12%, but for most working age out-of-work benefits the rise has been 21%. How can it possibly be fair or justifiable that the amount that people receive on benefits is increasing at a faster rate, and is more, than people receive in work? The freezes contained in clauses 9 and 10 go to the heart of reversing that damaging trend.
I want to make three key points about clauses 9 and 10. They support the original concept of welfare, as designed and intended by its father, Beveridge. In 1942, when the Beveridge report was published, he enshrined the key principles of what welfare should stand for—to help those who found themselves in occasional exceptional need. It was to help people cope with unexpected and temporary afflictions of sickness and unemployment.
Catherine West
Is the hon. Lady aware that the Government’s proposals would affect 740,000 families in which there are children with disabilities?
Suella Fernandes
What I am aware of is that the reforms are part of a package that includes an increase of free childcare to 30 hours, which is worth about £5,000 and will help working families combine work and childcare. That is how we are going to help children. Work, not benefits, is the route out.
Beveridge’s guiding principles were clear—the individual has to take greater responsibility, alongside the state establishing a national minimum standard to ensure that the most vulnerable are looked after and that the system is sustainable. The main problem with the existing welfare system is that it has allowed businesses to act in a way that is both unpalatable and bad for the economy. It has facilitated the underpayment of workers, which has allowed chronic under-training and under-investment in staff. The problem is simple. If a business or an employer knows that low wages will be topped up by the state, what is the point of investing in its workforce? What is the point of investing in training or promotion?
Alan Brown (Kilmarnock and Loudoun) (SNP)
Does the hon. Lady think it is fair that businesses will get a taper on the increase in wages? She complains that tax credits subsidise businesses, yet the poorest in society will not get a taper—their income will be cut right away in April. How is that fair?
Suella Fernandes
The Government are pragmatic and sensible, and they will be responsive. They will make announcements in the autumn statement that will deal adequately with that issue. [Interruption.] I have limited time and I want to make progress. It is important that we make work pay by stopping businesses underpaying their staff.
My next point is that we need to ensure that everybody keeps in mind the fact that the reforms are part of a package. The new measures on free childcare, the rise in the personal allowance, the tax lock on income tax, VAT and national insurance, and the welcome introduction of the national living wage will all ensure that household incomes rise over the course of this Parliament. People will be able to keep more of the money that they earn, rather than pay it in tax, which would just go to more Government expenditure.
Finally, the manner in which the Opposition have behaved is shameful. Prior to the election, there were suggestions that they would back our welfare reforms, acknowledging that welfare had become unsustainable and costly. They equivocated and suggested support. Even in July the right hon. and learned Member for Camberwell and Peckham (Ms Harman) was clear in her support for the reforms. What we have seen now is opportunism and the politicisation of an issue on which consensus is required. That is shameful and underlines the Opposition’s lack of integrity and decency, when we need cross-party support on this difficult issue. I support the clauses as drafted and expect the Opposition to do so too.
Hannah Bardell (Livingston) (SNP)
I welcome my hon. Friend the Member for Airdrie and Shotts (Neil Gray) to his position as I move across to the business brief. From his speech earlier, I am sure the social justice team has a very talented member.
I shall speak to amendments in this group tabled by my colleagues, particularly amendments 53, 54 and 55, which clearly state the SNP’s opposition to the Government’s two-child policy. The SNP wholeheartedly condemns the Tory Government’s intention to restrict tax credits to two children, which by definition excludes many of the poorest children in society from our social security system, going against the very principles for which it was set up. The Government’s proposals also stray into an area of policy making that I never thought I would see suggested by any Government who had a shred of compassion for their people. Hidden away in the Red Book were the words:
“The Department for Work and Pensions and HMRC will develop protections for women who have a third child as the result of rape, or other exceptional circumstances.”
No detail was provided. How much disrespect can this country take?
Alison Thewliss (Glasgow Central) (SNP)
Does my hon. Friend agree that it is appalling not only that that appeared in the Budget statement, but that during the consideration of the Bill there has been no explanation of how that will work in practice?
Hannah Bardell
I could not agree more. The two- child policy will hit more than 872,000 families who receive support for third and subsequent children. The Government’s own national child poverty strategy recognises that the risk of poverty is much more significant in larger families than in smaller ones. Currently a third of children living in poverty live in families with three or more children. Perhaps that is why the Tory Government seek to airbrush child poverty from the statute books.
It is easy for this Tory Government to espouse theories and claim that reducing financial support to just two children will make poorer families rethink their “financial choices”. That is based on the falsehood that all children are planned and that it is possible to financially plan for children. I am sure we are aware that that is not the case. What if a second pregnancy turns out to be twins or even triplets? What about the many families who are supported or led by kinship carers? Perhaps the Tories need a biology lesson, or a simple lesson in humanity.
Such eventualities cannot be planned for, so are we telling families across these nations to stop having children, just in case? I have raised many times in Committee, and many of my colleagues have raised on the Floor of the House, the sensitive issue of children resulting from rape and the insensitive Government plan to make women justify their children in front of DWP caseworkers. Many domestic abuse charities have expressed grave concerns, and Rape Crisis Scotland has warned that the plan is “inherently unworkable”. It has asked how DWP workers will prove whether someone has or has not been raped, and said that many women would find explaining that situation extremely uncomfortable. Many women do not report to the police that they have been raped, or go years without reporting it or speaking about it, so they cannot be expected to explain it to a DWP worker.
What training will a DWP worker have to deal with rape victims? It is clear that this is an unrealistic, ill thought out and unhelpful proposal. In evidence before the Select Committee on Work and Pensions, stakeholders described it as “unpalatable”, and the hon. and learned Member for Holborn and St Pancras (Keir Starmer) wrote in The Guardian recently:
“A rape test for welfare is a chilling way to save money”.
I could not agree more. It just goes to show that at the height of the Tories’ insensitivity, they will quite literally leave no vulnerable group untouched in their scramble to, as they put it, balance the books. The policy will ultimately result in a complete abuse of rape victims’ privacy, leading to potentially serious emotional damage for children should they become aware that they are a child resulting from a rape. The SNP amendments would see the policy abolished, and we urge the Government to remove the two-child policy from tax credit and universal credit to ensure that no victim or child goes through the torment associated with having to justify a third child due to such an horrific crime being inflicted—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I am sure that the hon. Lady is about to conclude.
Hannah Bardell
If we as parliamentarians are in this place to legislate for those we represent, let us legislate well and with compassion and good conscience. The proposals do not make good legislation. They are wrong for our society and wrong for this generation, so I ask Members to think again and vote with us.
Marcus Fysh (Yeovil) (Con)
I spoke the other day about how tax credit reform is part of moving to the higher wage, higher productivity, higher opportunity economy that the Government are building. I have been talking to the Chancellor behind the scenes about welfare reform for many months, and he is listening. Welfare reform is, however, an essential part of the broad package of reform that is helping to return our nation and its people to a sound financial future. The Opposition offer no alternative.
In my professional life before becoming a Member of this House, I was involved in the pensions and savings industry. I know how important saving is in building people’s future and their economic resilience. I believe that reforming national insurance contributions and entitlements is a good way to further incentivise work, deal with the hurdles to advancing at work caused by high marginal tax and benefit withdrawal, and provide scope in the budget for transitional arrangements. That could address the impact of tax credit reform on those with the lowest regular income.
Insurance businesses work by taking premiums from people and investing them over long periods, usually in dividend-paying and other shares that grow substantially in value over time to generate returns that are then available to those who need to claim on the scheme. Unfortunately, our national insurance contributions are not invested in the same way but are spent year in, year out on the claims of those using the NHS or the state pension, or are lent out to other Departments for their spending. We should add major savings reform to what we are doing, by reforming national insurance to create a genuine low-cost defined-contribution investment scheme that people can use to supplement their entitlements under the state pension system and that can be made available, under certain circumstances, ahead of retirement age. Credits could be offered to the lowest paid even if they did not meet the threshold for payment of traditional national insurance, to kick off their contributions and get them used to saving. They could also be used to supplement some payments by employers or to provide transitional funds, which could be substantial.
The investment scheme could also be available to others who wanted to make a contribution. I believe that it should be accompanied by tapering the threshold for the payment of traditional national insurance contributions, and the rate, to make the marginal incentives to work more efficient while letting people keep more of their earnings. That could be paid for by tapers on the higher limit and rate of national insurance obligations and entitlements for those on the highest incomes, particularly the entitlement eligibility of very high income retirees. I note that the principle is already established that state pension entitlement cannot pass in its entirety from spouse to spouse, and that entitlement to state pension is not an asset. I believe that that measure could make available several billion pounds.
Tax credit reform is not an option, but is essential in moving to a higher wage economy that will better provide for the future of all of us. Reform of national insurance is a neat solution that is not inconsistent with our manifesto. Nor is reform of the working tax credit system, as part of our overall package of reform.
Tom Brake
I support new clause 1, although it is still not entirely clear to me what the Labour party’s position is on this question. In this place Labour has tabled new clause 1, which is in effect a fatal motion, whereas in the other place Labour would only support transitional protection. I assume that the Labour party is now fully opposed to the tax credit cut.
Tom Brake
I will not give way, as I have to finish at 2.57 pm.
Tax credit cuts will hit 4,000 families in my constituency and 7,000 children. Collectively, some £4 million will be lost. The cuts will hit hard-working families who are struggling to make ends meet and, perhaps most importantly from the Government’s point of view, the changes will reduce the incentive to work, which I thought the Government favoured. Contrary to what the hon. Member for Sutton and Cheam (Paul Scully) said, I do not think that tax credits are a pat on the head. They are essential in supporting families.
Paul Scully
The right hon. Gentleman said that he was going to talk about this, but does he not agree that when I spoke about a pat on the head I was talking about the original tax credits, which were received by nine out of 10 families, including those with salaries up to £60,000 and not just low income families?
Tom Brake
Indeed, and changes were made to tax credits to take that into account. However, tax credits are now needed to support people who are in low-paid work and will not suddenly see their salaries rise dramatically to compensate them for the loss of those tax credits. The cuts are regressive and should be opposed by the House. I hope that that will happen in the vote that is about to take place on new clause 1.
Damian Hinds
I start by welcoming the hon. Member for Airdrie and Shotts (Neil Gray) to his new position and I wish the hon. Member for Livingston (Hannah Bardell) well in her new role.
These amendments intend to prevent the Government from making future changes to control welfare spending and we cannot support them. The Government’s approach is clear: our mission is to get wages up, taxes down and welfare under control. New clause 1 seeks to revoke the 2015 tax credits regulations and new clause 8 seeks to delay the introduction of the regulations unless and until the Government put in place a scheme of transitional protection for existing tax credit claimants for a minimum of three years. The House will recall that the Government tabled the regulations for a vote on the Floor of the House on 15 September, rather than their being scrutinised upstairs in Committee, to allow wider discussion on the regulations and to allow all hon. Members the opportunity to debate and vote on the issue. This House voted in favour of the regulations.
The House further discussed the regulations in the Opposition day debate on Tuesday 20 October and again voted in favour of them. However, as the House will also be aware, last night unelected Labour and Liberal Democrat Lords voted against tax credit regulations, raising constitutional issues that the Prime Minister will address.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Is the constitutional issue that politicians should not lie to people in their manifestos?
Damian Hinds
I can only guess that the hon. Lady is making a strange reference to the Conservative manifesto. We were very clear in our manifesto that we are still only halfway through the job of getting the deficit down to zero. It stands at £3,300 for every household in the United Kingdom and we said very clearly during the election campaign that, as part of that, we needed to make £12 billion of welfare savings. What was not in our manifesto was the national living wage.
The Chancellor has said that he has listened to concerns from colleagues in this House and will come forward with proposals in the autumn statement to achieve the goal of reforming tax credits, saving the money needed to secure our economy while helping with the transition through the changes. I do not believe that the new clauses are therefore appropriate for inclusion in the Bill.
I now turn to amendments 49 to 52, which intend to prevent the freeze for four years of working age benefits, child benefit and tax credits. The freeze of the main rates of the majority of working age benefits, child benefit and tax credits will, in total, contribute some £3.5 billion of savings by 2019-20, and will help us to achieve our objective of deficit elimination. It will put welfare on a fairer and more sustainable footing so that we can continue our investment in our national health service and our schools, even as we get the national finances back into balance.
As my hon. Friend the Member for Fareham (Suella Fernandes) pointed out, there is an imbalance in a system that has seen a rise in average earnings of 12% since 2008, and in working age benefits, such as jobseekers’ allowance, of 21%. The individual element of child tax credit has risen by 33%. The freeze will help reverse that trend, helping earnings to grow faster than benefits, which will strengthen the incentives to work, and deliver the savings necessary to bring down the overall welfare bill. None the less, the Government will continue to offer protections to the most vulnerable. We know the best way to support people is to help them move closer to the labour market, but of course we realise that that is not possible for everyone. That is why we have made many important exemptions to the four-year freeze. We have exempted pensioner-related benefits, personal independence payment, disability allowance and attendance allowance relating to the additional cost of disability as well as statutory payments, carers’ allowance, the support group component of the employment and support allowance and disability elements in tax credits.
Simon Hoare (North Dorset) (Con)
The list that the Minister has just given to the House underscores entirely the compassionate, one nation Conservative approach that we are taking to these issues in sharp contradistinction to the Opposition parties, which seek to lecture but which have no remedy.
Damian Hinds
My hon. Friend is right, and it is right that those exemptions are made.
Neil Coyle
Will the Minister be absolutely clear that the half a million disabled people receiving ESA in the work-related activity group will not be protected under the measures that he has just outlined?
Damian Hinds
People who are in the work-related activity group are, by definition, people who are to be helped to move closer to the labour market. What I have said in the list of exemptions that I have read out is that the amounts that are specific to the additional costs of disability are protected, which is something that we discussed in Committee.
Damian Hinds
If the hon. Gentleman will forgive me, I will not give way, because it is 3.2 pm and I need to stop by 3.5 pm.
Amendments 53 and 55 seek to remove clauses 11 and 12 from the Bill, and amendment 54 seeks to retain the payment of the family element of child tax credit for all persons who are responsible for a child or a qualifying young person born before 6 April 2022.
The Government want to ensure that the system is fair both to those who pay for it and to those who benefit from it. Currently, the benefit system adjusts automatically to family size, but many families who are only in receipt of income from work would not see their budgets flex in the same way when they have more children. The Government want to encourage those families who are in receipt of benefits to make the same financial choice about the number of children they have as those families who are supporting themselves solely through income from work.
Damian Hinds
If the hon. Gentleman will forgive me, I will not give way.
That is why the Government have proposed changes to child tax credit and to the child element of universal credit, as set out in clauses 11 and 12 respectively. The Government will look at the important issues around exemptions through secondary legislation, which is a better way of dealing with these matters. Indeed, we discussed when that could be done in Committee with proper reflection and working together with stakeholders and experts.
I also wish to make it clear that the changes will not affect families already receiving the child and family elements before 6 April 2017 and who remain on benefit after that date, including such families who subsequently leave universal credit for a period of less than six months, and families who make a new claim to universal credit and who have been in receipt of tax credits for more than two children or qualifying young persons in the past six months. In addition, the Government will continue to support larger families through child benefit, which is paid for all qualifying children in a household, and paid at a higher rate for the first child.
In conclusion, the amendments oppose our clear mandate to find £12 billion of welfare savings and to restore fairness to the system by ensuring that work always pays. In making these changes, we have balanced the vital task of bringing spending under control while ensuring that the support is there for those who need it most. I therefore urge hon. Members to withdraw their new clause.
Question put, That the clause be read a Second time.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Natascha Engel)
With this it will be convenient to discuss the following:
New clause 3—Personal independence payment: timing of payment—
‘(1) Schedule 10 of the Welfare Reform Act 2012 is amended as follows.
(2) In paragraph 1(1), at start insert “Subject to paragraph ( ),”
(3) At end of paragraph 1(1), insert the following new paragraph—
“( ) Where a person in receipt of disability living allowance meets the requirements of section 82 of the 2012 Act his or her entitlement to disability living allowance shall terminate immediately and entitlement to personal independence payment shall commence on the same day.”’.
This New Clause aims to enable claimants of DLA who are transferred to PIP due to terminal illness to receive their first PIP payment immediately after being transferred. Currently claimants must wait four weeks from their final DLA payment to be made and then another four weeks to receive their first PIP payment.
New clause 4—Review of application of sanctions—
‘(1) The Secretary of State must before the financial year ending 31 March 2016 provide for a full and independent review of the sanctions regimes attached to working-age benefits, including but not limited to Jobseekers Allowance, Employment Support Allowance and Income Support, to determine whether they are effective and proportionate for meeting the Government’s objectives.
(2) The terms of reference for the review must include consideration of—
(a) the application of sanctions to lone parents with dependent children;
(b) the application of sanctions to claimants who are disabled;
(c) the effectiveness of sanctions in moving claimants into sustained work; and
(d) any other matters which the Secretary of State considers relevant.”
To provide for a full, independent review of the operation of the sanctions regimes attached to out of-work benefits, to determine the effectiveness of sanctions in moving claimants into sustained work as well as any adverse impacts on particular groups.
New clause 5—Report on impact of benefit cap reductions—
‘(1) The Secretary of State must publish and lay before Parliament before the end of the financial year ending with 31 March 2017 a report on the impact of the benefit cap reductions introduced by this Bill.
(2) The report must include an assessment of the impact on each of the measures of child poverty defined in the Child Poverty Act 2010.”
This new clause requires the Secretary of State to review impact of lower benefit cap after 12months.
New clause 7—Changes to the benefit cap—
Changes to the Benefit Cap shall not be made until the Secretary of State has carried out an assessment of the impact on its effect on poverty and laid a report before the House of Commons, The Scottish Parliament, The Northern Ireland Assembly and the National Assembly for Wales.”
New clause 9—Universal credit and carers—
Claimants in receipt of universal credit who are responsible carers for children are not subject to work focused interviews or work preparation requirements until their youngest child starts school.”
New clause 10—Changes to age of eligible claimants of housing benefit—
The Social Security Contributions and Benefits Act 1992 is amended as follows. After section 130(1) insert—
‘(1A) The Secretary of State shall not make provision about eligibility for housing benefit in respect of the age of a claimant except by primary legislation.”.”
New clause 11—Entitlement to housing costs element of universal credit for 18-21 year olds—
‘(1) Entitlement to the housing cost element of Universal Credit shall not be restricted for those 18 to 21 year olds who fall into the following categories—
(a) those who have previously been in work;
(b) a person who lives independently;
(c) those with a disability or mental health problem receiving Employment Support Allowance or Income Support;
(d) those with dependent children;
(e) pregnant women;
(f) those who are owed a rehousing duty under—
(i) section 193 of the Housing Act 1996;
(ii) section 9 of the Homelessness etc. (Scotland) Act 2003;
(iii) section 73 of the Housing (Wales) Act 2014;
(g) those who are homeless or at risk of homelessness who are being assisted by local authority housing teams;
(h) those who are living in statutory or voluntary sector homelessness accommodation;
(i) those who have formerly been homeless and have been supported by voluntary or statutory agencies into accommodation;
(j) those who have formerly been homeless between the ages of 16 and 21;
(k) a person without family or whom social services have found that a home environment is not suitable for them to live in; care leavers and
(l) those leaving custody.
(2) Within three months of section [Entitlement to housing costs element of universal credit for 18-21 year olds] of this Act coming into force, the Secretary of State must, by regulation, provide definitions of—
“a person who lives independently”;
“risk of homelessness” and
“a person without family”.”
New clause 12—Review of application of sanctions—
‘(1) The Secretary of State must on commencement of this bill, commence a full and independent review of the sanctions regimes attached to working-age benefits, including but not limited to Jobseekers Allowance, Employment Support Allowance and Income Support , to measure the impact on—
(a) to lone parents with dependent children;
(b) claimants who are disabled;
(c) moving claimants into continuous work;
(d) homeless;
(e) protected characteristics;
(f) long term health conditions;
(g) claimants with mental health disorders and
(h) any other matters which the Secretary of State considers relevant.”
Amendment 35, in clause 6, page 8, line 39, leave out subsection (2)
Amendment 36, in clause 7, page 9, line 2, leave out “£23,000 or £15,410” and insert “£26,000 or £18,200”
Amendment 37, page 9, line 3, leave out “£20,000 or £13,400” and insert “£26,000 or £18,200”
Amendment 38, page 9, line 15, leave out paragraph (a)
Amendment 39, page 9, line 17, leave out paragraph (b)
Amendment 40, page 9, line 19, leave out paragraph (c)
Amendment 41, page 9, line 21, leave out paragraph (d)
Amendment 42, page 9, line 27, leave out paragraph (f)
Amendment 43, page 9, line 39, leave out paragraph (k)
Amendment 44, page 9, line 41, leave out paragraph (l)
Amendment 45, page 9, line 44, leave out paragraph (n)
Amendment 46, page 9, line 46, leave out paragraph (o)
Amendment 47, page 9, line 48, leave out paragraph (p)
Amendment 48, page 10, line 1, leave out subsection (6)
Amendment 56, page 14, line 15, leave out Clause 13
Amendment 29, in clause 13, page 14, line 26, at end insert—
‘(3A) The Secretary of State may not lay an order under section 31 to bring the provisions of subsections (2) and (3) into force until he has laid before both Houses of Parliament a report giving his estimate of the impact of those provisions on persons who would otherwise be entitled to start claiming the work-related activity component of employment and support allowance.
(3B) No order bringing subsections (2) and (3) into force shall be made unless a draft of the order has been laid before and approved by a resolution of both Houses of Parliament”.
Amendment 31, page 14, line 29, at end insert—
‘(5A) The Secretary of State must make provision for additional personalised and specialist employment support in connection with the changes made by subsections (1) to (3).
(5B) The Secretary of State must issue guidance on the following—
(a) the forms of personalised and specialist employment support;
(b) the means by which a diverse market of suppliers for personalised and specialist employment support can be developed in local areas; and
(c) information for local authorities seeking to improve local disability employment rates.”
Amendment 20, page 14, line 39, leave out Clause 14
Amendment 57, page 14, line 39, leave out Clause 14
Amendment 58, page 15, line 1, leave out Clause 15
Amendment 59, in clause 15, page 15, line 4, leave out paragraph (a)
Amendment 60, page 15, line 4, leave out paragraphs (a) to (c) and insert—
“(a) in section 19(2)(c) for the words “under the age of 1” substitute “who has not yet started primary school””
Amendment 61, page 15, line 9, after “2,”, insert “3 or 4”
Amendment 62, page 15, line 10, leave out paragraph (c)
Amendment 63, page 15, line 13, leave out paragraph (a)
Amendment 64, page 15, line 13, leave out paragraphs (a) and (b) and insert—
“(a) in regulation 91 (claimants subject to work-focused interview requirement only), for the word “3” substitute “5 or when the child starts primary school”;
(b) in regulation 91A (claimants subject to work preparation requirement) for the words “3 or 4” substitute “who has not yet started primary school”;”
Amendment 65, page 15, line 15, leave out paragraph (b)
Debbie Abrahams
It is a pleasure to be here on my first occasion at the Dispatch Box. On Second Reading I conveyed my concerns about the Bill, and after a few weeks in Committee I have not changed my opinion. I said then that I thought this is a wicked Bill, and I still feel that.
Amendments 56 and 20 seek to leave out clauses 13 and 14 so as to prevent cuts to the work-related activity component of employment and support allowance, and to the limited capability for work element of universal credit. We believe it is unjust and unfair that disabled people and those with serious health conditions who have been assessed during the work capability assessment as not fit for work and placed in the work-related activity group should have their social security support cut by nearly £30, from £102.15 to £73.10.
Compelling evidence from the independent Extra Costs Commission, which analysed the additional costs facing disabled people, shows that on average they spend an extra £550 per month on things associated with their disability. The Government’s proposed cuts to people in the ESA WRAG come on top of a host of other cuts to social security and support for disabled people since 2010. Demos has estimated that by 2018, £23.8 billion will have been taken from 3.7 million disabled people, with 13 policy changes in the Welfare Reform Act 2012.
The cut in the ESA WRAG comes on top of the freeze in other social security support and the £3.6 billion of cuts to social care. My hon. Friend the Member for Pontypridd (Owen Smith) has argued for a cumulative impact assessment of cuts to tax credits and other benefit reforms for working families on low incomes, as defined in new clause 2, but why has that not happened already? Why have the Government not undertaken a cumulative impact assessment of the latest proposed cuts for disabled people, given that it is a requirement under the Equality Act 2010? I raised that point in Committee, and although I am grateful to the Minister for her response, she implied that only one model can be used to analyse the distributional effects of a policy. That is a flawed judgment. The Equality and Human Rights Commission is somewhat surprised by the suggestion that such cumulative modelling is not possible, given that it is undertaking its own cumulative impact assessment. I understand that the commission has written to the Government and highlighted the resources that are available to help them do that work, and perhaps when she responds the Minister will enlighten the House as to whether the Government have changed their mind.
The Government have also failed to provide evidence to substantiate their claim that working families on low incomes will be better off in spite of having tax credits taken from them—for example, through the introduction of the new national minimum wage, changes to personal allowances, and extended childcare provision. The Government’s meagre offering of an impact assessment for clauses 13 and 14 has failed to provide reassurance that disabled people will not be subjected to serious financial hardship. Although the assessment estimates that approximately 500,000 disabled people and their families will be affected by the cut to the ESA WRAG, there is no analysis of the impact this will have on the disabled people who will be pushed into poverty.
Ian Lavery
I am not sure whether my hon. Friend was present about an hour ago, when the Minister suggested that it was a good idea for people in the work-related activity group to lose 30% of their benefits so as to move them nearer to employment. How ridiculous is that?
Debbie Abrahams
I entirely agree with my hon. Friend. In fact, I am going to move on to a section specifically concerned with incentivising work and how on earth people with, for example, progressive conditions can be incentivised.
Richard Graham (Gloucester) (Con)
I welcome the hon. Lady to her place. On the specific issue of trying to help people in the work-related activity group to get into work, does she agree that the current system is not working as well as it should and that we need to spend more money on helping them find jobs? It is harder for them to find jobs than it is for other people on jobseeker’s allowance. In answer to the point made by the hon. Member for Wansbeck (Ian Lavery), that is precisely why we should be transferring money into helping them to get jobs.
Debbie Abrahams
I thank the hon. Gentleman for his intervention, but his question belies the facts. Some £640 million is being withdrawn from people in the ESA WRAG, while £100 million is meant, in some undisclosed manner, to provide support. There is no information from the Government on how that will support disabled people back into work.
As I was saying, there is no analysis of the impact that this will have on the disabled people who will be pushed into poverty. Disabled people are twice as likely as non-disabled people to live in persistent poverty, and 80% of disability-related poverty is caused by their extra costs. Last year, there was a 2% increase in the number of disabled people who were pushed into poverty. That is equivalent to 300,000 people. The Minister’s recent reply to me did not address this particular point, so I would be very grateful if that could be explained. Half a million disabled people will be affected and lose £30 a week—nearly a third of their weekly income. What is the Government’s estimate of the increase in the number of disabled people who will be living in poverty?
Neil Coyle
I welcome my hon. Friend to her rightful place on the Labour Front Bench. Is she aware that in the other place Lord Low is going to carry out an independent review of poverty, in the absence of a Government study? Will she encourage the Government to interact with that independent review, in particular on poverty and the impact on higher health and local authority costs as a result of the reduction in ESA?
Debbie Abrahams
My hon. Friend makes some excellent points. The Equality and Human Rights Commission is able to undertake that analysis. Other bodies and organisations are doing it, so why are the Government not able to do it? Surely this is what we should expect from the Government in their implementation of policy. There are real concerns from disabled charities, disabled groups and Lord Holmes, the chair of the EHRC’s disability committee, about the extent to which the assessment of the impact on disabled people is understood.
On incentivising work, on Second Reading the Secretary of State for Work and Pensions stated:
“the current system discourages claimants from making the transition into work.”—[Official Report, 20 July 2015; Vol. 598, c. 1259.]
What about people with progressive conditions, such as Parkinson’s, multiple sclerosis and motor neurone disease, who have no prospect of recovery but have undergone a work capability assessment? They have been found not fit for work and placed in the WRAG group. Are the Government seriously saying that the measure will incentivise this group of disabled people into work? They have already been found not able to work through the Government’s own assessment process. Their progressive conditions are not going to change. This is a real concern.
Mr Anderson
I welcome my hon. Friend to her position on the Front Bench. As chairman of the all-party group on muscular dystrophy, I would like to tell her that information shared with me suggests that people across the whole field of disability believe that this measure will actually have the opposite effect from the one intended. Rather than providing an incentive for people to go to work, it will mean that they will struggle to continue to have the independence they need. This £30 deduction will make a big difference: people will wonder whether they can afford to maintain their mobility, which will have a detrimental effect, making it less likely that they will find work than if they are left where they are now.
Debbie Abrahams
My hon. Friend makes an entirely valid point. Disabled people will find it more and more difficult to live fulfilling lives that enable them to make contact and fulfil their potential, which everyone should have the right to do, so it will be a disincentive.
Simon Hoare
I am chairman of the all-party group on multiple sclerosis. I entirely understand the hon. Lady’s concern and, indeed, the sort of representations made by the hon. Member for Blaydon (Mr Anderson). However, does she take heart, as I do, from the fact that Ministers are part of a party that brought forward pioneering legislation on disability rights, which should provide comfort that Ministers on the Treasury Bench will make sure that no policy will leave people behind?
Debbie Abrahams
Yes, it is right to acknowledge the Government’s role in bringing in the Disability Discrimination Act 1995, but this Bill flies in the face of that legacy. I really hope that by the end of today, the Government will be able to provide some reassurance, because to date there has simply been none for disabled people.
In Committee, the Minister said that these cuts would not affect people currently on the ESA WRAG, but does that mean that people diagnosed with progressive conditions, but assessed after the Bill is enacted, will be deemed to have a different form of the progressive condition? Will they require less support, or do the Government finally accept that, apart from being dehumanising and exacerbating people’s health conditions, the work capability assessment is not fit for purpose and needs a complete overhaul so that people with progressive conditions are not placed in the ESA WRAG? I would really appreciate some clarity on that point.
Surely if the Government were serious about supporting disabled people into work, there would be measures in place to support into work those disabled people who are able to work. How many employers will be engaged? Although the Disability Confident scheme is a good first step, only 68 employers are currently active in it, and they will certainly not be able to support the 1.3 million disabled people who are able to and want to work. Do the Government intend to extend Access to Work beyond the 35,000 disabled people it helped stay in work or into a new job last year? What is going to happen about the appalling ratio of one disability employment adviser for 600 disabled people? [Interruption.] What estimates are there of the impact on the employment of disabled people of this measure and the reduction of the 30% disability employment gap?
Helen Goodman (Bishop Auckland) (Lab)
My hon. Friend has just said the most astounding thing I have heard in this Chamber for a very long time. There is one work adviser for 600 people. In the course of a year, I wonder whether each person would get some attention just once. Has there been any assessment of the absurdity and ineffectiveness of this situation, as contrasted, of course, with the marvellous suggestions we heard a short while ago from the hon. Member for Gloucester (Richard Graham)?
Debbie Abrahams
That figure was revealed through the work done when I sat on the Select Committee. Yes, it is shocking. Some are trying to say that this Bill is about encouraging people into work, but there are no measures in place to support it. Indeed, my next point is—where exactly is the “work” bit in this Welfare Reform and Work Bill? Here we are on Report, and these basic questions have still not been answered. All we know from the Government’s impact assessment is that by 2020-21, approximately £640 a year will have been cut from social security support for disabled people—on top of the £23.8 billion of support that has already been taken from them—and that £100 million a year will be provided in unspecified support to help them into work. That is a disgrace; disabled people deserve much better.
Simon Hoare
Hitherto, the hon. Lady has been making a very thoughtful and considered speech. It may not be up to me, as a new Member, to say this, but the sentence that she has just uttered has fundamentally undermined the cause of her argument, and I invite her to reconsider it.
Debbie Abrahams
I appreciate that it is strong language, but I can only provide the hon. Gentleman with the evidence. In 2010, the use of the term “scrounger” by the mainstream press had increased by more than 330%, and it has remained at that level. We should always be mindful of the language that we use as leaders, and of how it is perpetuated.
Ian Lavery
May I advise my hon. Friend not to take any lectures from the team opposite when they are asking her to calm down in respect of her language against the disabled? Constantly, for the last five years, they have attacked disabled people, poor people and lower-paid people. No apologies are required.
Debbie Abrahams
I used that language to draw attention to the issue in the House, and more widely. I did so partly because I am sure I am not the only one to remember the autumn statement two or three years ago in which the Chancellor, at the Dispatch Box, referred to “closed curtains” when people were going out to work. It was quite clear what that implied. I use such language very carefully, and I repeat that its use in the media has increased by 330%. We all have a responsibility in this regard, including the country’s leaders.
The innuendo is that people with a disability or illness might be faking it or feckless. That is grotesque. As a former public health consultant, I speak with some knowledge. It is recognised that incapacity benefit and ESA are good population health indicators, and the release of the Government’s own data has proved the point. Disabled people in the ESA WRAG are a vulnerable group who need our care and support, and not our humiliation.
Richard Graham
I invite the hon. Lady to come to the opportunities fair in my constituency on 6 November, which is specifically focused on helping people in the ESA WRAG category to find opportunities for getting back into work. It will be very similar in tone to the first Disability Confident fair we held a year ago, and I am sure she would want to encourage Members from all parts of this House to hold these events and champion people like that who are trying to find jobs.
Debbie Abrahams
In return, I ask the hon. Gentleman to ask his constituents who are on ESA WRAG how they will be affected by these proposals and whether they will have to cut back on such journeys and work fairs because of the cuts the Government are likely to impose. Up and down the country good work is being done to support people back into work, but this measure is not part of that.
Several hon. Members rose—
Debbie Abrahams
I am not going to give way anymore, as I am conscious of the time.
These cuts are punitive and wrong. They fly in the face of the Conservative party’s pledge to protect disabled people’s benefits. With this cut to ESA WRAG support, without putting in place anything to replace it, the Government are condemning more disabled people and their families to live in poverty. I predict that more tragedies will happen. I will be pushing our proposals to a vote and urge all Members to do the right thing by supporting the removal of clauses 13 and 14 from the Bill.
New clause 4 requires that the Government undertake a full independent review of their sanctions regime by 31 March 2016. It is with considerable regret that, after the Work and Pensions Committee’s report earlier this year, which also recommended an independent review of benefit conditionality and sanctions, the Government have failed to recognise the real concerns about their new sanctions regime, either in response to what was said in the Bill Committee or to that report.
I have been campaigning for an independent review of sanctions for nearly two years, and in that time constituents have come to me with their stories about how they have been sanctioned. One constituent was told while he was undergoing the work capability assessment that he was having a heart attack and should go to hospital, yet two weeks later he received a letter to say that he had been sanctioned. People up and down the country have also got in touch with their stories of how they have been sanctioned, for example, for being a few minutes late for an appointment with an adviser or work coach. Increasingly, people are being sanctioned unreasonably, for example, because they had attended their mother’s funeral, been hospitalised or gone to a job interview—this is absurd.
There was another category of reasons for being sanctioned. I still have the email from a constituent who had received a letter saying he had been sanctioned for non-attendance at a meeting with his adviser at the jobcentre, even though he had evidence that he had been there. The penny dropped when another constituent, who had worked in jobcentres across Greater Manchester for 20 years, came to me to tell me that as part of the new sanctions regime introduced at the end of 2012, the DWP had targets for sanctions. As he described it, claimants were being deliberately set up to fail, whether they had done anything wrong or not.
The Work and Pensions Committee also became concerned while conducting an inquiry in 2013 on “The role of Jobcentre Plus in the reformed welfare system”. At that stage, it recommended the following:
“DWP should launch a second, broader, independent review of conditionality and sanctions, to include investigation of whether the process is being applied appropriately, fairly, proportionately and in accordance with the rules, across the Jobcentre network.”
Graham Stuart (Beverley and Holderness) (Con)
I am concerned about the issue the hon. Lady raised about targets for sanctions, as this is a serious allegation to make and it is a serious issue. It is possible to meet people from all sorts of walks of life who through their profession may have some professional insight, but their word alone is not enough to suggest that something is true—one does need verification from elsewhere. Can she substantiate her point? What did she find out that would make us believe it is true?
Debbie Abrahams
The hon. Gentleman makes my point for me: that is why we need the independent review. There was enough evidence to leave real concerns about this matter. The Select Committee thought that the Minister had agreed to a review, but as paragraph 100 of the report states, unfortunately he reneged on that promise. In addition to these serious ethical issues, there were, and still are, concerns about a number of people affected, particularly in the case of ESA claimants, and about the meteoric rise in the use of sanctions.
Peter Dowd (Bootle) (Lab)
Does my hon. Friend recall that in the summer the Department for Work and Pensions was forced to admit to having invented quotes from fake benefit claimants, which meant that its sanctions leaflets had to be withdrawn pretty quickly?
Debbie Abrahams
My hon. Friend makes a valid point. That is one of the reasons why we need an independent review to investigate such matters.
Graham Evans (Weaver Vale) (Con)
I congratulate the hon. Lady on her new role on the Front Bench—she has done far better than me. When she and I served on the Work and Pensions Committee, we investigated this matter and found no evidence of benefit sanctions targets in the jobcentres we visited. I have two outstanding Jobcentre Plus offices in my constituency, and I have seen no evidence whatsoever of any targets there. How can she stand at the Dispatch Box and say that there are targets for sanctions when, to the best of my knowledge, there is no evidence that they exist?
Debbie Abrahams
I thank the hon. Gentleman for his kind remarks. I understand that his wife has previously worked in a Jobcentre Plus office. To reiterate my response to the hon. Member for Beverley and Holderness (Graham Stuart), the whole point is that there is some evidence and that we need a better understanding, which is why we need an independent review.
Helen Goodman
If there is to be an independent review, does my hon. Friend agree that it should take evidence from the National Audit Office, which has stated that although the targets might not come from the Minister’s office, the performance management of the jobcentres amounts to targets, because what it measures does not take into account the numbers of people who are supposed to go back into work or the quality of advice they receive?
Debbie Abrahams
My hon. Friend makes a valid point. The Select Committee reported on the fact that there are targets for off-flow, which means getting people off the books. Those in themselves are targets. [Interruption.]
Debbie Abrahams
Well, I will move on to that shortly and show exactly why we believe that is happening.
In addition to those serious ethical issues, we have also seen a meteoric rise in the use of sanctions. ESA sanctions increased from 60,363 between June 2010 and October 2012 to 245,679 between November 2012 and March 2015, which corresponds with the introduction of the new sanctions regime. As I have said, people on ESA are disabled or have serious health conditions.
The new sanctions regime is also particularly punitive. People are without financial support not just for a week or two, because the minimum sanction is now four weeks. Subsequent misdemeanours can mean up to three years of sanctions, whereas previously the maximum was six months. That has particularly affected young people, disabled people and lone parents. In addition, during 2013-14 it became clear that although no other benefits, such as housing benefit, were meant to be affected, in some cases housing benefit was automatically being stopped. The obvious implication is that families will be getting into debt as a result.
The fact that since January 2014, on average, nearly half of ESA sanctions have been overturned on appeal surely confirms that there are issues with sanctions policy and practice. The Work and Pensions Committee published its report in March this year, revealing even greater concerns about the inappropriate use of sanctions, their ineffectiveness in getting people into work and the impact on the health and wellbeing of claimants.
The Select Committee received evidence that sanctions were being driven by targets to get claimants off-flow in a way that distorted the JSA claimant count. A team from Oxford analysed data from 376 local authority areas and found that 43% of JSA sanctioned claimants left JSA and that 80% did so for reasons other than employment. In July, the Social Security Advisory Committee also raised concerns about the effectiveness of the sanctions regime in getting people into good quality jobs, and called for better evidence to underpin sanctions policy.
Debbie Abrahams
Absolutely.
Similarly, there are concerns about the impact of the benefit cap on disabled people, who already face extra costs associated with their disability, as I mentioned earlier. It is estimated that 150,000 adults and 395,000 children will be affected by the reduction in the cap. We believe that, in conjunction with the freeze in local housing allowance, cuts in social housing rents and a lack of affordable homes, the lower cap also risks exacerbating the housing crisis. The Government’s own impact assessment concedes that rent arrears, evictions and homelessness will increase as a result of the lower cap. We believe that further reductions in the benefit cap in London and elsewhere risk pushing tens of thousands of children, families and disabled people into poverty. We are the sixth wealthiest country in the world. It is not right that the Government are seeking to secure the recovery on the backs of the working poor, their children and disabled people. I hope they will think again.
Graham Stuart
I, too, would like to congratulate the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) on her new position.
I want to speak narrowly to new clause 3, tabled by the hon. Member for Sheffield Central (Paul Blomfield). The new clause would amend the regulations that currently mean that a claimant who is moved from the old disability living allowance system to the new personal independence payment award must wait 28 days after a decision before receiving the new benefit. Those regulations allow a claimant who is moving to a lower award to adjust to their new financial circumstances by receiving the old award for a period of time, which is extremely welcome.
The unintended consequence of the regulations, however, has been that some of the most disabled and vulnerable people in our society, including those who are terminally ill, are being forced to wait almost a month, and sometimes longer, to receive the extra money they need to meet the costs resulting from their illness. That situation most commonly affects individuals who have become entitled to additional money through PIP because their diagnosis has become terminal.
I am grateful to Macmillan Cancer Care for the work that it has done in this area. Let us imagine a cancer patient, who is already receiving some support under the old DLA system because of their illness, and who receives a terminal diagnosis. They inform the Department for Work and Pensions about this, and the Department makes a decision about their eligibility for additional financial support as a result of their terminal diagnosis. I am pleased to say that that decision should be made within six days—a target timescale that was introduced precisely in recognition of the fact that those who are terminally ill are in particular need of timely assistance.
Jo Churchill (Bury St Edmunds) (Con)
I, too, have seen the Minister to push this point, to ensure that the vulnerable—particularly the terminally ill—do not fall through the cracks as they transition from the DLA to PIP. I thank the Minister for listening, and I look forward to receiving confirmation of how we are going to ensure speedy payments and minimum waits for that group, as I have been assured will happen, so that those people can get their funds in advance. All these things help, and it is not right that they should have to wait. I am grateful for being listened to.
Graham Stuart
I am grateful to my hon. Friend for her intervention, in which she has succinctly made my entire speech for me. She sets an example to all of us in how to convey an argument as briefly as possible.
If a decision is made within six days—which is a good thing—why must an individual then wait 28 days to receive the additional financial support that it has already been decided they should get? That financial support could help them meet the costs of the sudden onset of daily living needs or mobility needs that can accompany a terminal diagnosis. There are examples of people missing out on, in some cases, hundreds of pounds. People miss out not only on the additional money through PIP, but on other financial support such as free car tax, premiums in means-tested benefits and other passported benefits, because eligibility for those benefits kicks in only when the additional PIP starts to be paid. It cannot be right that an individual who has a life expectancy of less than six months is being forced to wait a minimum of 28 days—perhaps one sixth of their life expectancy—for vital financial support on which they depend.
At the heart of this Government’s welfare reform programme is a commitment to protecting the most vulnerable people in our society. The context of today’s debate, given the tough financial decisions that are having to be made, is one of a transformation in the work opportunities, employment chances and life chances of so many people across our society, so that they can try to escape the labyrinthine mess that was left behind by the former Labour Prime Minister and Chancellor. That is what we are trying to do—create a society in which everyone, including the disabled, can be looked after properly. That is why I believe it is entirely in the spirit of these reforms to amend the current regulations so that anyone who transfers from DLA to PIP due to a terminal diagnosis is paid the additional support promptly and does not have to wait 28 days. It is not a large group, but it is a group of some of the most disabled and vulnerable individuals in our society.
Graham Stuart
My hon. Friend wants to give whatever remains of the argument in my speech, and I give way to her again.
Jo Churchill
I thank my hon. Friend. During the conversations to which I referred, I received confirmation that no one would lose those four weeks’ money, and that following the decision to award PIP new claimants would have their claim backdated, so I look forward to confirmation of such positive news.
Graham Stuart
My hon. Friend really does keep stealing my punches, because I too have met the Under-Secretary of State for Disabled People, and he was most sympathetic in listening to these arguments. There are technical issues that are going to be dealt with, but I will return to that.
The positive impact of such a change on the individuals who are currently affected by the rule would be immense. It would that ensure people could afford the support they need in the final few months of their lives. In Committee, the Government suggested that changing the regulation could mean that a case manager would not have sufficient time to consider the case. I do not follow that argument, because the 28-day rule applies once a decision has already been made, so it should not have an impact on the time taken to decide on a case.
Having spoken to the Minister, I know that he is listening to the concerns raised by my hon. Friend the Member for Bury St Edmunds (Jo Churchill), myself and others across the House, and I hope we will get a positive response so that terminally ill people who are to see an increase in their financial support can receive it as soon as possible.
Richard Graham
Surely the point my hon. Friend raises and the Government’s response on some of these issues—which are sensitive, as other hon. Members have rightly said—indicate that the Government do care about this category of our constituents and are reacting and making changes that will help them, and totally give the lie to some of the irresponsible comments from the Opposition Front Benchers.
Graham Stuart
I would hesitate to give advice to any Member as to how they should conduct themselves, but this is an emotive area and these decisions affect vulnerable people. A balance has to be struck between fiscal responsibility, looking after the most vulnerable and changing the incentives so that we get people aligned with the best opportunity in the long term as well as the short term. These are sensitive issues, and I agree with my hon. Friend about the hon. Member for Oldham East and Saddleworth referring to the Government demonising the disabled and the poor in a way that she did not substantiate at all. One mention in an autumn statement two or three years ago of the fact that some people abused the system is not an effort to demonise the poor and disabled, and suggesting that undermines the other arguments—and there are strong arguments to be made in this area and questions that need to be asked about the Government’s programme.
The decisions being made are not easy, and they will not all be right, but trying to smear the whole Government Front-Bench team loses people rather than wins them over. I do not think the hon. Lady needs to do that in order to make a powerful case and have a strong hearing outside this place; if what she says looks like partisan point scoring and personal vilification, it will undermine the arguments she is trying to pursue and champion.
I am delighted that the Minister is listening. I hope and expect—as I know all my hon. Friends and Opposition Members do—that we will find a solution to this technical challenge and make sure it is delivered as quickly as possible, so that the terminally ill get the money they are due as quickly as possible.
Dr Eilidh Whiteford
I shall speak to the amendments in this group in my name and the names of my party colleagues, namely new clauses 9, 10, 11 and 12, amendments 35 to 48, 56, 20 and 57 to 65, and new clause 7, on which I will open my remarks.
New clause 7, along with amendments 35 to 48, is intended to amend the parts of the Bill relating to the benefit cap. Amendments 35, 36 and 37 would maintain the cap at its current rate, while amendments 38 to 48 would mitigate the differential impact of the Government’s proposals on specific groups of claimants by exempting from the benefit cap bereavement allowance, carer’s allowance, child benefit, child tax credit, guardian’s allowance, maternity allowance, severe disablement allowance and widowed parent’s allowance.
The bottom line, and the key point to be made today, is that many of the provisions in this part of the Bill are entirely arbitrary and have no robust evidence to support them. By proposing an arbitrary benefits cap, the Government fail to acknowledge the underlying drivers of benefits increases. They fail to acknowledge, for example, how soaring private sector rents in parts of the UK with astronomical house prices and chronic under-supply of affordable housing push up the cost of housing benefit—money that usually goes straight into the pockets of private landlords, often without even passing through the hands of tenants. But I recognise that that is not the only driver, and in the absence of proper analysis, setting the benefits cap at an arbitrary level is possibly the worst example of policy making on the back of a fag packet that I have seen in this place for quite some time. Although I support the Labour amendment that would force the Secretary of State to review the impact of the lower cap more regularly, I would prefer to see this very weak piece of policy making removed completely from the Bill.
Dawn Butler (Brent Central) (Lab)
On the effect of the cuts, Brent council has produced its own report, which highlights the fact that in Brent 13,600 households and 26,200 children will be affected.
Dr Whiteford
The hon. Lady makes a useful point. I am aware that Brent is one of the areas where the benefits cap will be particularly keenly felt, but all our big conurbations are affected, especially those where there is a large gap between the incomes of the wealthiest and people who are earning what in any other part of the country would be a decent wage, but in certain parts of the UK is not enough to live on.
I am glad to see that Labour Members have supported amendment 56, which I intend to press to a vote this evening. I shall also address some of the related amendments, 57 to 65, all of which would affect support for those distanced from the labour market, whether under employment and support allowance or universal credit. They would remove the provisions in the Bill that seek to reduce ESA for those in receipt of the work-related activity component.
I want to be absolutely clear that SNP MPs will oppose the proposals in clauses 13 and 14, which are an outright attack on people who are seriously sick, disabled, or living with debilitating long-term health problems. We are talking about people who are so seriously incapacitated that even the Government’s own stringent assessment process has deemed them unfit for work at present. Slashing support for sick people will not help them recover more quickly. In fact, money worries are one of the things that often slow down people’s recovery from serious illness. We have just heard a powerful speech delivered from the Government Benches about support for people who are terminally ill, but sometimes people recovering from illnesses that could go either way need a long time to recover, and they do not always get the support and the sympathy they need.
I am deeply concerned by the Government’s rhetoric on this matter. The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) hit a raw nerve earlier when she suggested that some of the Government’s language has been deeply inappropriate, but as recently as the summer Budget the Chancellor said it was a “perverse incentive” for ESA claimants to receive more than jobseeker’s allowance. When a person has been assessed as not currently fit for work, I fail to see how reducing their income by 30 quid a week will get them into work faster.
Today, the Disability Benefits Consortium has released figures suggesting that 70% of disabled people surveyed say that the cut will make their health worse, not better. There are other important considerations to take into account, however, particularly for those with long-term disabilities or health conditions that compromise their ability to work over long periods. A lifetime of disability or the development of a long-term condition already erodes the financial assets and resilience of too many people, including carers. About one third of disabled people already live in poverty, and sick and disabled people who are unable to work—many disabled people do work, of course, and hold down steady jobs—face many costs that might not be immediately evident. For example, they might need to heat their home throughout the day at a higher temperature than would be necessary for a more active and fit person. They also incur those costs over a long period. In contrast, the vast majority of people on jobseeker’s allowance are on it for fairly short periods. About 60% of people on JSA move off the benefit within six months, whereas almost 60% of people in the work-related activity group need that support for at least two years.
Let us face it, most of us could, with a wee bit of effort, cope with a very low income for a week or two, but for those who face an extended period out of the labour market because of their health, £73 a week is just not sustainable. People will be eating poorly and will be unable to heat their home and clothe themselves adequately on such sums. Any one of us in this Chamber could find our lives, or the lives of the people we love, transformed at any moment by serious illness or disability. Earlier this afternoon someone described this as a civilised society, but in my view to be a civilised society we need an adequate safety net. We need to remember that returning to employment immediately is just not an option for people who have been deemed not currently fit for work.
I agree entirely with the Labour Front Benchers that the language the Government have been using has vilified and stigmatised sick and disabled people. Talking about “perverse incentives” implies that they are malingering. That is not the case. I do not think that a perverse incentive involves being so ill that one cannot work. When this part of the Bill was discussed in Committee, the Government seemed to suggest that they planned to use the savings from the cuts to ESA to provide additional funding for tailored employment support for disabled people. God knows, that is badly needed, given the fairly woeful performance of parts of the Work programme, but the only figure I have seen mooted by the Government is an increase of £90 million in employment support, whereas the measures are expected to save in the region of £640 million. Based even on the most rudimentary arithmetic, that seems a fairly paltry portion of the savings. I am also not convinced that it is the best use of resources given the direct adverse impacts on low-income, disabled and sick people. I would welcome detail from the Government on that, because from where we are standing now it looks extremely thin.
New clause 9 and amendments 57 to 65 all seek to reverse the proposals to introduce further conditionality on parents and responsible carers of very young children. I am particularly concerned about the potential impact on one-parent families. There is quite a lot of evidence that many lone parents are already struggling to comply with the new conditionality regime. We have seen disproportionate numbers of lone parents sanctioned, for example, and in recent days we have seen a massive U-turn by the Government in acknowledging that the sanctions regime is not working. I met representatives of One Parent Families Scotland just over a week ago and was gobsmacked by some of the examples they highlighted of struggling parents being sanctioned in extenuating and extremely difficult circumstances.
Currently, lone parents of children under five do not actively have to seek work, but they do need to attend work-focused interviews or work-related activity. Under this group of amendments, parents will be expected to be available and ready actively to seek work from the time their youngest child starts school, but not before. These proposals, which were pushed in Committee by my hon. Friend the Member for Livingston (Hannah Bardell) and supported by the lone parent charity Gingerbread, take account of the very real logistical hurdles faced by those who are parenting single handed, and do not unnecessarily penalise those children who are already more likely to be poor as a consequence of their family circumstances. The Government’s proposals increase the risk of sanctions for parents of very young children, which can only be detrimental not just for them but for our society as a whole.
That leads me on rather neatly to new clause 12, which is in my name and which I also hope to push to a vote tonight. It would compel the Secretary of State to conduct a review of the sanctions regime. I have called for an independent review previously in the House. In the last Parliament, as we have already heard, the cross-party Work and Pensions Committee called for a full independent review. Earlier today, my hon. Friend the Member for Ochil and South Perthshire (Ms Ahmed-Sheikh) eloquently called for that review, because it is manifestly clear that the new sanctions regime is just not working, as it is failing lots of very vulnerable and disadvantaged people. It is failing not just lone parents, but sick and disabled people, particularly those with invisible or fluctuating conditions such as mental health problems. We can see the fall-out from that in the explosion in the number of food banks in our constituencies and in almost all the communities that we serve.
Last week, we had tacit acknowledgement from the Government that the system is not working when they made their U-turn, announcing their so-called “yellow card” warning scheme pilot. They also showed a new willingness to consider reviewing those classed as at risk to include homeless people and those with mental health problems. I welcome those steps; they are an important change of tone in the Government’s approach, but we need action now and not in the new year—that part of winter when these problems will already have become a lot worse. We must recognise that these steps also fall far short of the independent root-and-branch review that is really needed.
If we are to move towards a more workable system, we need a solid evidence base and to understand better how sanctions have differential impacts on claimants who are disabled, those with protected characteristics such as gender and ethnicity, those with long-term health problems, including mental health problems, and those who are bringing up bairns single handed.
Finally, new clause 10 aims to ensure that any changes to the age of eligible claimants for housing benefit must be made by primary legislation rather than by regulation through the back door. New clause 11 offers protections for young people who cannot, for whatever reason, live with their parents. The Government said that they plan to cut housing benefit for 16 to 21-year-olds, but we on the SNP Benches do not think that that should be done through regulation. It is another example of a policy for which there is a very poor evidential base and which needs proper scrutiny. Some 60% of the young people set to be affected by this measure live in social housing. In other words, they are already likely to be deemed vulnerable by their local authority. Their age should not matter, but their need for support most certainly should. Again, this seems entirely arbitrary, and, again, we have seen none of the promised detail of support for those who are particularly vulnerable. I am forced to conclude that the Government have not thought through the implications of their slash-and-burn approach to our social security system.
Our amendments in this group seek to protect low income households, sick and disabled people and children. They offer the Government a way to mitigate the worst impacts of the legislation and help us all better to understand how we can genuinely improve our social security system. I hope that the Government will take some of that on board this evening.
Helen Whately
Over the past few weeks, the Welfare Reform and Work Bill Committee, of which I am a member, has had to make some difficult decisions, but they were decisions that the electorate showed in May that they wanted us to make. The decisions that we have had to make can be seen both in this Bill and in the summer Budget.
I do not support the Opposition’s proposed new clause 2, but its wording shows that they do recognise that these reforms are part of a broader and coherent plan. They are part of a package of measures to create the kind of economy and society that people want. I am not talking about a society in which people spend years on benefits and low pay but one in which work pays, people keep more of what they earn and everyone has a chance to be better off.
Dawn Butler
In the context of people earning more, does the hon. Lady believe that we should take into the consideration the Living Wage Foundation’s report on how much the living wage should be?
Helen Whately
When the announcement on the national living wage was made, the Living Wage Foundation supported it, and I hope that Labour Members can do the same.
Jo Churchill
This is only a minor point, but the hon. Member for Pontypridd (Owen Smith) said earlier that the minimum wage is £6.50, yet it actually went up to £6.70 on 1 October. Knowing how much we are paying people is the first step. A living wage is what we are driving towards so that people have more in their pocket—[Interruption.] At the moment the national minimum wage is £6.70, and we are driving it up to £7.20.
Dawn Butler
On a point of order, Madam Deputy Speaker. I think that the hon. Member for Bury St Edmunds (Jo Churchill) might be inadvertently trying to mislead the House in that the living wage is actually £9.15 an hour, according to the Living Wage Foundation.
Madam Deputy Speaker (Natascha Engel)
I am afraid that I did not catch the intervention by the hon. Member for Bury St Edmunds (Jo Churchill), but I am sure that she was not trying to mislead the House.
Jo Churchill
Indeed I was not, and I apologise if I did. I was merely trying to make the point that the current minimum wage is £6.70 and not £6.50 as was stated earlier. We are moving towards a higher-wage economy. [Interruption.]
Madam Deputy Speaker
Order. The hon. Member for Faversham and Mid Kent (Helen Whately) is in the middle of her speech, and this is a debating point rather than a point of order, so can we please continue?
Helen Whately
Thank you very much, Madam Deputy Speaker.
Labour’s new clause calls for an impact assessment. There have already been several impact assessments, but the strongest one of all was that made by the thousands of people in May who voted for a Conservative Government on a manifesto that pledged to build a stronger economy with more jobs and lower taxes, to move from deficit into surplus, to protect public services such as the NHS, and to bring down the welfare bill. Labour Members oppose these reforms. They want to keep on taxing people and using that tax to subsidise below-the-breadline wages.
It is time to break that cycle, and these reforms will do that. They include the national living wage, from which 2.7 million people will receive a direct increase in income and at least 3 million more will get a knock-on benefit. Would Labour Members seek to delay that? If so, they would already be too late, because the benefits are already being felt. Wages are going up, and 200 companies have committed to increasing their lowest rates of pay in advance, including Sainsbury’s, Morrisons, Lidl, IKEA, Asda, and British Gas.
Mr Anderson
Does the hon. Lady have any idea what her Government plan to do about the people who have been left behind with pay increases—the 5 million or so public sector workers who have had their pay frozen or cut over the past seven or eight years? What do the Government intend to do to bring them up to the living wage, because they have not had a pay rise for more than seven years?
Helen Whately
Public sector workers are getting a 1% pay rise. Over the past few years, private sector pay has, in the main, been frozen while public sector pay has continued to go up.
I will move on to the Opposition amendments on the benefits cap. The Government intend to reduce the cap to £20,000, or £23,000 in London. We should be clear that that is the net figure, so it would amount to a salary of about £25,000 before tax. We have heard some rather mixed messages from Labour Members. Their leader has said that he wants to cap benefits overall but not for individuals. I am sure that it will become clear today exactly where they stand on the amendments tabled by SNP Members, who I understand do not want any reductions in the benefits cap. Benefits should be a safety net. We need a benefits system that is sustainable and therefore affordable and fair. It cannot allow people to do better on benefits than in work. That creates the wrong incentives. It is also deeply unpopular and therefore unsustainable in its own right. Surely Opposition Members have had conversations with people who are just above the threshold that would allow them to receive most benefits. They must understand their legitimate anger when they see their taxes funding a lifestyle they cannot afford.
Peter Dowd
Is the hon. Lady aware that 70% of the money that the Treasury will save as a result of cuts to tax credits will come from working mums?
Helen Whately
It was pointed out in Committee that people who receive benefits also pay tax. I do not think we should try to parcel people up in different tribes or groups. This is about getting the right thing for the country, trying to help everybody make the most of their opportunities and making work pay.
I have certainly had difficult conversations on the doorsteps in my constituency, because the majority of employees in Faversham and Mid Kent are paid less than £20,000 per annum. At its current level the benefits cap has been working. More than 16,000 capped households have moved into work, and households subject to the cap are 41% more likely to get into work. We know that work is the best way out of poverty and I believe that everyone in this House wants to see people move out of poverty. We should make the benefits cap work harder. That is what this is about.
Graham Stuart
It is shocking that Opposition Members find themselves unable to talk about the jobs miracle of the past five years. We have created more jobs in this country than the rest of Europe combined. That is the dignity that people want. What we did not need was people who were on 16 hours a week and disincentivised from taking on any extra work because they would lose out if they did so. That is the mess that Labour left behind and we are disentangling it so that we can create a fairer society for everybody.
Helen Whately
I thank my hon. Friend for making his point so forcefully.
I will move on to the proposed amendments to clause 13. The Bill Committee heard evidence of the damage that a long period or a life on welfare can do to people. Our witnesses talked about people who had been out of work for a long time having their confidence destroyed, and about how they begin to feel that they are not capable of changing their lives. We were also told that 61% of people in the work-related activity group want to work, yet only 1% come off that benefit each month. I am sure that many of us know of people who find it difficult to get into work for all sorts of reasons, such as mental health problems, and need extra help to do so. The current system is not working well enough. Not only does clause 13 remove financial disincentives, but, critically, and hand in hand with that, the Government have committed new funding to help that group of people into work, which is a response to what they really want.
Neil Coyle
What message does the hon. Lady think she is sending to the 8,000 people with progressive and incurable conditions in the employment and support allowance work-related activity group when she says they should be working rather than receiving support?
Helen Whately
I had a conversation recently with the company that does the work assessments. We talked about the importance of people with progressive conditions not being put in groups that would lead to them being made to work if it is not possible for them to do so. We should not assume, however, that just because someone has a progressive condition they do not necessarily want to work and be helped to do so.
Although many people knock jobcentres and are critical of them, the Committee also heard about the effective work they do across the country in supporting people, particularly those faced with barriers, to get into work. I have heard of some great examples in my own constituency in Kent.
In summary, many important and valid points have been raised in Committee and in this Chamber. The amendments, however, propose to pull apart a package of considered changes to welfare, including tax changes such as increases to the personal allowance and access to free childcare, as announced in the summer Budget. That package of measures is about making work pay and helping people into work.
Helen Whately
I am just summing up, so the hon. Lady will forgive me if I do not give way.
Opposition Members are not offering a credible alternative or, in fact, any alternative. Throughout the Committee stage and today’s debate we have heard many criticisms, but a complete absence of positive proposals to make the welfare system more effective at getting people off welfare and into work—this is an opportunity for Opposition Members to make such proposals—and to make the welfare system more sustainable and affordable.
Hand in hand with criticising the Bill, Opposition Members should say what they would do to make work pay and help people into work; what savings they would make to ensure the welfare bill is more sustainable; what cuts they might make to public services—for instance, whether they would cut the NHS or reduce its funding—and what taxes they would put up, other than raising the top rate, which they know does not raise extra revenue; or would they just keep on borrowing, which is increasing the debt for future generations?
Emily Thornberry (Islington South and Finsbury) (Lab)
Will the hon. Lady give way?
Helen Whately
I am just summing up, so I will not give way, if the hon. Lady will forgive me.
Coupled with that is the desire of Opposition Members to keep a welfare system that does not work and does not help enough people into work, when we now—with the economy growing, plenty of jobs and wages going up—have an opportunity to do something about it. We have a plan, and in the absence of a plan of their own, I encourage them to back ours.
Mr Anderson
This debate should be about people, not constitutional niceties or the economy. It is not about some faceless, inanimate objects, but real people at the sharp end. I have been asked by the Muscular Dystrophy Campaign, with which I work as the chair of the all-party group on muscular dystrophy, to raise the impact of these changes to support, which build on the cuts and challenges brought in by the coalition Government during the past five years. It has real concerns about the changes to ESA, JSA, housing benefit, tax credits and the new universal credit. It has asked me to raise the cases of real people, and that is what I will do.
I want to talk about Bill. After 25 years as a coalminer, he had to retire in his early 40s. He had long-term health problems and died at the age of 48. Joy, who as a young girl swam with Durham County, went into the world of work and then, in her early 20s, was struck down by a disease. She died at the age of 53, from heart failure. Joanne, a girl who was born with defects, spent a lifetime struggling to get on in her life. A lovely young woman, she died at the age of 42, cruelly, after suffering for a long time. Jacqueline died from a massive heart attack at the age of 40. Unfortunately, the hon. Member for Beverley and Holderness (Graham Stuart) has left the Chamber, but she was one of his constituents. Ian, a young boy who struggled through his early years, was just starting to develop, but died at the early age of 19 from a heart attack, beside a swimming pool while doing what he did best.
These five people had three things in common: they were all part of my family; they all suffered from myotonic muscular dystrophy; and, to a greater or lesser extent, they all looked for support from the welfare state. These people’s lives were happy if tough, but ultimately they were short-lived. Thank God that the people who went before them had the guts, nous and determination to build a welfare state that meant they could live a reasonably secure and stable life.
No doubt Conservative Members would say that my family were part of the dependency culture. Do you know what? They would be absolutely right. These members of my family were dependent on the state for help with the costs of medication and of care, and they were dependent on the state for day-to-day living costs, as well as for help with transport, mobility, housing and hospitalisation. If they were alive today, they would no doubt be in the direct sights of Conservative Members, so I will now use the language that has been used today.
This Government have demonised people who depend on the welfare state, and through a clear strategy of dog-whistle tactics, they have worked to convince many in this country that anyone on benefits is a scrounger. They have led people to believe that if anyone passes a house with closed curtains while on the way to work in the morning, they can safely assume that anyone inside is a bone-idle waster who needs to be ridiculed and demonised.
Graham Evans
This is a very important debate. In the last Parliament I had the privilege of sitting on the Work and Pensions Committee, and it is a pleasure to follow the hon. Member for Blaydon (Mr Anderson). I am sorry to hear about how his family have been affected by Duchenne muscular dystrophy. A member of my family suffered with that condition and died aged 21 after many years of suffering. It is a dreadful disease, but this Government’s reforms are not about inflicting anything on people with diseases such as Duchenne muscular dystrophy.
Reforming welfare is crucial to achieving a sustainable welfare system that is fair to the most vulnerable in society and also to the hard-working taxpayers who pay for it. Without sound public finances, there can be no economic security for working families, and the country cannot pay for the hospitals and schools that we rely on. Those who suffer most when Governments run unsustainable deficits are not the richest, but the very poorest.
Ian Blackford
We have heard much from Government Members about sustainable welfare spending, but how would they define it? Is not the heart of the problem the fact that through the things they are doing, the Government are pushing many children into poverty and redefining poverty? Is it not the case that when we change the definition, we change the truth?
Graham Evans
I think I am grateful for the hon. Gentleman’s intervention. This is about choices and what we spend our money on. There is no such thing as a magic money tree, and if Scottish nationalists are not happy with these measures, perhaps they will inform the Scottish people how much they will pay in tax—we never hear that from the SNP. If they do not agree with welfare reform, they should tell the House and the people of Scotland how much they will put up taxes.
The Bill continues on from the Welfare Reform Act 2012, restoring the ethos that it always pays to work to the heart of the British welfare system. The 2012 Act set in place a benefit cap.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the hon. Gentleman accept that this debate is between growth or cuts to get down the deficit? We are taking a lot of money from the poorest people—those on tax credits and welfare—but those people spend all their money consuming things while richer people save some of it. The macroeconomic impact of the cuts—especially across the country outside London—will be deflationary, undermine growth and increase debt. Is that not economically illiterate?
Graham Evans
The hon. Gentleman has a fine record of representing his constituents. That argument is often made by Opposition Members, but I do not necessarily agree with it. The most important thing is for people to get into work and to get into higher paid work.
The Welfare Reform Act 2012 wanted to reduce the benefit cap to £26,000, or £500 a week. That is a net figure. If tax and national insurance are taken into consideration, the cap is actually £36,000. The Bill expands on the 2012 Act, lowering the cap, rightly, to £20,000 per household, or £23,000 in the London area. The changes restore fairness to the welfare system: they are fair for the hardworking taxpayers, who have to pay for the welfare, and ensure that work always pays. The savings from the benefit cap will be used in conjunction with other measures to fund 3 million apprenticeship places to secure the future of our young people.
This is about choices. This House takes very seriously the security and defence of our country—we are committed to spending 2% of GDP on it. I am absolutely delighted that Labour Members are also committed to that 2% target, but if they are committed to 2% of GDP for defence, and to spending on welfare and overseas aid, where will the savings be made? If they want savings to be achieved through an increase in taxes, they should please tell the British people how much more tax they will have to pay.
I sat on the Work and Pensions Committee investigation into benefit sanctions. We hear a lot of noise from Opposition Members about benefit sanctions, but the truth is that the condition has always been applied to the payment of unemployment benefits. The concept of conditionality enforced by financial sanctions dates back to the 1980s. It is nothing new, even under 13 years of a Labour Government. Conditionality remains a necessary part of the benefits system and is still one of the most effective tools for encouraging engagement with employment support programmes at the jobcentre. Some 70% of claimants say they are more likely to follow the rules if they know they risk having their benefits stopped. Sanctions are used only as a last resort and in a very small percentage of cases. Only 6% of JSA claimants and 1% of ESA claimants have faced sanctions in the past year, and the number of sanctions issued has fallen by a third.
Geraint Davies
In Swansea, the area that I represent, 65% of JSA claimants have been sanctioned at some point in the past two years, according to the citizens advice bureau. That is intolerable.
Graham Evans
Swansea is a fine city and the hon. Gentleman represents it very well. That may be the case in Swansea, but I can only speak about the Jobcentre Pluses that the Work and Pensions Committee investigated. We did not see any evidence of targets. In my constituency, I have two Jobcentre Pluses. They are outstanding and do a fantastic job. We have almost full employment in Weaver Vale and the surrounding area. The centres do a great job of trying to get the people who are unemployed into jobs. If hard-working taxpayers who pay for benefits and welfare did not turn up to work on time and do a good job, they would be sanctioned—they would be sacked. There has to be fairness. Finding a full-time job is a full-time job. There is the claimant commitment. All I am saying to the House is that in my experience I have not seen any target culture in the Jobcentre Pluses I have visited.
Emily Thornberry
Is the hon. Gentleman aware that the Islington Law Centre in my constituency has a 100% success rate in overturning sanction decisions?
Graham Evans
I am grateful to the hon. Lady for that intervention. She makes a powerful point. She represents north London and I represent a seat in the north-west. When the Committee investigated Jobcentre Plus, one of the things I used to argue for was best practice. There are some outstanding examples of Jobcentre Plus practice. Perhaps the north London jobcentres need to look at best practice elsewhere in the Department for Work and Pensions.
Emily Thornberry
The point is simply this: the hon. Gentleman may be right, so will he support our call for an independent review of sanctions across the country, so we can see where there is good practice and where there is bad practice?
Graham Evans
The hon. Lady raises a good point, which others have raised, too. I would encourage the Select Committee to do a further investigation into Jobcentre Plus. My personal experience is that it does an outstanding job. I carry out job fairs in my constituency and I am organising my fifth one since I became an MP, during which time I have seen unemployment halved in Weaver Vale. One thing I learned from working with the jobcentres in Runcorn and Northwich was the number of high-quality and well-paid jobs available.
Let me provide an example. Waitrose came to town—to Northwich. It is under no obligation to give interviews, but when it came to Northwich, it said it would interview 25% of local people on the books of the local jobcentre. In the end, it interviewed 70%, and I am pleased to say that more than 50% of those it took on for the new Waitrose in Northwich were local people. I spoke to many of the people employed there. There were lots of young ladies, and ladies not quite so young, who had been unemployed for many years. They now have themselves a fantastic career with a John Lewis partnership. I asked them why they were unemployed for so long, and they said that the training given by Jobcentre Plus and the local Cheshire West and Chester work zone was what made them job-ready, able to do well in interviews and capable of producing a good CV.
The last time I checked, Waitrose was delighted with the quality of the workforce—one that, as I say, had been unemployed for a very long time. Some of the jobs are part time, but some people want that, and they are good-quality jobs and very well paid. This is exactly the sort of Jobcentre Plus activity that I hope goes on in everyone’s constituency. I was going to say more about Jobcentre Plus, but I shall give that a miss as I have already made the points.
Everyone with the ability to work should be given the support and opportunity to work. The previous system wrote too many people off and left too many trapped in a cycle of welfare dependency. Over the last five years, the number of people in Weaver Vale claiming jobseeker’s allowance and universal credit while not in employment fell by more than 1,000—a 51% drop. I am not saying that my jobs fairs had anything to do with that, but they probably helped in some way.
This Government’s long-term economic plan is working for Weaver Vale, getting people off a life on benefits and back into work. I have not heard of an alternative to our long-term economic plan recently—or at all, in fact. Employment has been this Government’s real success, with 2 million more jobs—and 1,000 created each and every day during the last Parliament.
Graham Jones (Hyndburn) (Lab)
I question this “long-term economic plan”. Is it the one intended to cut the deficit entirely by 2015 or the one to cut it by 2020? Which one of those long-term economic plans is it?
Graham Evans
The hon. Gentleman raises a good point. The long-term economic plan I am talking about is taking this country from the depths of despair we experienced in 2010. If we carry on the way we are going, we will be the biggest economy in Europe. I have to confess that I have a vested interest as I have young children and I am interested in their future. Do we all want to leave a credit card debt of £1.4 trillion? As long as we carry on with the deficit, we are adding to that debt. It is all about choices and paying down the deficit, which we will do by 2019-20. It is about paying down the debts of my children and the hon. Gentleman’s children so that they will not be saddled with our credit card debt.
We understand that the route out of poverty is not through welfare; poverty can be left behind through work. International development is a recognition of that. When we as a country give 0.7% of our GDP to overseas development, we look for ways to help countries to stand on their own two feet. Helping communities and individuals all comes through work.
The OBR has predicted that a further million jobs will be created over the next five years, but this is the party of ambition, and we want to go further. This Bill is working to a target of full employment and puts an obligation on the Secretary of State to report on progress towards that target. I wholeheartedly agree with that.
This Bill is a major stepping-stone, moving Britain from a high welfare, high tax, low wage economy to a lower welfare, lower tax and higher wage economy. It continues the work of my right hon. Friend the Secretary of State for Work and Pensions in the last Parliament, making work central to Britain’s welfare system. These reforms are transforming the lives of some of the poorest and most vulnerable people in our communities and giving people the skills and opportunities to get on in life and stand on their own two feet.
Several hon. Members rose—
Madam Deputy Speaker (Natascha Engel)
Order. Before I call the hon. Member for Bermondsey and Old Southwark (Neil Coyle), let me remind the House that, while this is a very interesting and lively debate, 12 Back Benchers and the Minister are still to speak before the knife comes down at 6 pm. If interventions could be short and kept to a minimum, that would be great, because there are still quite a few Members whom we wish to call.
Neil Coyle
I want to speak about new clause 3, to which my name is attached. It was a privilege to be a member of the Bill Committee, which studied this issue in some detail. I thank the hon. Member for Beverley and Holderness (Graham Stuart)—who is no longer present—and the hon. Member for Bury St Edmunds (Jo Churchill) for speaking positively about the new clause. I hope that that is an indication of consensus that it is a necessary amendment to the coalition Government’s changes in relation to personal independence payments. I also pay tribute to my hon. Friend the Member for Sheffield Central (Paul Blomfield) and his local citizens advice bureau. They helped with the drafting of the new clause, and also provided genuine case studies of terminally ill people who are missing out on the swifter support that the new clause would deliver.
New clause 3 is designed to address a bureaucratic anomaly that has arisen since the Government began ending disability living allowance and introducing personal independence payments. New claimants of PIP who become terminally ill can access additional support swiftly, and under the DLA system, people could, on receipt of a terminal prognosis, access help swiftly. However, since PIP has begun to replace DLA under the coalition’s regulations, an issue has arisen that affects people who are already on DLA, become terminally ill, and are required to move on to PIP before they can access the additional help that the whole House seems to agree should be provided. The aim of the new clause is to enable people receiving DLA who are transferred to PIP owing to terminal illness to receive their first new payment immediately after being transferred. Currently, claimants must wait four weeks for their final DLA payment to be made, and then another four weeks to receive their first personal independence payment.
The Government have suggested that they are protecting disabled people from the worst cuts. The new clause is concerned solely with terminally ill and disabled people: people with an existing impairment or health condition, and a terminal prognosis. That is a very small group. To meet the Department’s definition of “terminally ill”, the claimant would need to provide independent medical evidence of a prognosis of six months or less to live. While it is great to have the support of the hon. Member for Beverley and Holderness for the new clause, it is slightly more disturbing that Members should suggest that only those with six months or less to live should benefit from our welfare system.
On 9 September, I asked the Department to specify the number of people on DLA who could benefit from the new clause. The response was that the information on the number of disabled people affected was “not collated” by the Department, and
“could only be provided at disproportionate cost.”
That was an incredibly disappointing response, given the nature of the people whom we are discussing.
In May this year, the DWP did publish a statistical report on registrations, clearances and awards of PIP, which indicates how many people might qualify under the new clause. As at 31 March 2015, the number of reassessments under
“special rules for the terminally ill”
was just 1,600 in two years. So that the Government can cost the new clause, let me explain that we are talking about roughly 800 people a year who are disadvantaged by current processes and who would benefit slightly from a more empathetic system: that is, disabled people who are on DLA and are moving to PIP owing to terminal illness.
Let me give the House a couple of genuine case studies. Carol is 59, lives in Sheffield, and was receiving the DLA care component at the lowest rate of £21.80 per week. On 27 May this year, following a diagnosis of terminal, metastatic breast cancer, she notified the DWP that she wanted her claim to be reconsidered under the special rules. The Department awarded her the highest rate of daily living and mobility components of PIP, worth more than £100 a week extra to reflect her new needs and her terminal prognosis. However, owing to the application of the transitional PIP rules, payment was from 8 July, four weeks after her next DLA payment. Had she been a new claimant for PIP and not already receiving DLA, the benefit would have been paid immediately. Carol lost about £240 as a result of a bureaucratic anomaly.
John was diagnosed with terminal lung cancer. He also has chronic obstructive pulmonary disease, and has had his right leg amputated below the knee. He lives in Sheffield and receives disability living allowance, with a high-rate mobility component and a low-rate care component. Under PIP, he is entitled to an enhanced rate of the care component and a high-rate mobility component. Although he discovered on 10 August that the additional help would be available, his next DLA payment was due on 2 September, and under the anomaly he did not qualify for the extra help until 30 September. We are talking about almost an eight-week delay for someone living in those circumstances.
Given the circumstances of those involved, some people affected by the change will simply not live long enough to receive the extra help to which they are entitled under existing rules. That additional waiting time was not required under DLA rules and has arisen purely as result of the introduction of PIP by the coalition Government. PIP is now being rolled out nationally and this issue will begin to affect more people in more constituencies. If Carol or John were new claimants, they would have got help quicker. When people are terminally ill, time is more pressing and more precious. John and Carol are genuine people who would, if the new clause is accepted, have a little more help for a little more time.
We discussed this issue in Committee at some length, and the Minister for Employment suggested that
“PIP recognises the unique challenges of claimants who are terminally ill.”––[Official Report, Welfare Reform and Work Public Bill Committee, 15 October 2015; c. 435.]
John and Carol, however, demonstrate how PIP has introduced an obstacle to swift support and left some people with less help. It is my understanding that that bureaucratic anomaly was an accident, as we discussed in Committee, rather than deliberate policy design, but the result is that it has delayed support for terminally ill and disabled people. The new clause would change that situation.
In Committee, the Minister also emphasised that PIP handles new cases under a fast-track system, with claims, on average, being cleared within six working days and with 99% of people going on to receive an award at a higher rate. That is welcome, but it serves to highlight the disadvantage for former DLA claimants moving to PIP, as opposed to the system for new claims, statistics for which the Minister cited. The fast-track system reflects the fact that these people have only six months to live and was meant to mirror the DLA system. The new clause would replicate the system in a way that addresses the anomaly arising from regulations and would provide equivalent support for those on DLA transitioning to PIP and new claimants.
In Committee, the Minister undertook to meet me and interested parties to address our concerns, and that meeting will be tomorrow. I am grateful for the Minister’s time but I thought there would be more of a window of opportunity for the Government to explore this issue in detail before Report and Third Reading. I understand that they may be willing to address this issue in the other place and, as I say, I am pleased to have heard positive comments from some Government Members, but a strong indication today that the Government do intend to address the issue would be very helpful. I hope they will accept the new clause or indicate how they will introduce their own mechanism to fix the anomaly caused by the PIP regulations, which leaves the most disadvantaged terminally ill people waiting while their time with family, friends and loved ones runs out.
Amanda Milling (Cannock Chase) (Con)
Having served on the Bill Committee, I am grateful for the opportunity to speak in this debate. I would like to focus my attention on amendments 35 to 48 relating to the benefit cap, and speak first to amendments 35, 36 and 37. In my view, it was absolutely right in the last Parliament to introduce the benefits cap, and it is right that we review its level now, as set out in clause 7. For those reasons, I do not support the amendments, which seek to keep the cap at the current level.
Many of the things I will touch on this afternoon have been covered by my colleagues, but I wish to make a few points. The benefits cap was introduced in the last Parliament to make work pay or, to put it another way, to incentivise people into work, ensuring that those people who can work are always better off doing so, rather than living a life on benefits. This was about creating fairness in the system.
Amanda Milling
I am going to make some progress.
It is morally right that people who can work are better off in work; why should someone who is able to go to work get more money on benefits than in work? There has been strong support for that argument, both nationally and in my constituency. As I have mentioned in this Chamber before, Cannock Chase is a former mining area, where there is an incredibly strong work ethic. That might go some way to explaining why people would spontaneously say to me on the doorstep that they really supported the cap. That is notwithstanding the general public’s support. A YouGov survey conducted in the previous Parliament demonstrated the strength of public feeling, with around three quarters of respondents supporting the cap.
Amanda Milling
If the hon. Lady does not mind, I am going to make progress.
Not only do people support the cap, but there is evidence that it is working. It is reforms such as these that have helped encourage people back into work. In my constituency of Cannock Chase, unemployment has fallen dramatically. Since May 2010, the number of people claiming jobseeker’s allowance has fallen by a staggering 70%. It is measures such as the benefits cap that have contributed to that fall. That is also evidenced by the figures mentioned by my hon. Friend the Member for Faversham and Mid Kent (Helen Whately). Since the cap was introduced, 16,000 capped households have moved into work. Further analysis shows that households subject to the cap are 41% more likely to go into work, compared with similar uncapped households. There is also evidence to show that those who are subject to the cap are doing more to find work, whether by submitting more applications or attending more interviews.
However, one of my key concerns—this can be seen nationally and in my constituency—is whether the benefits cap goes far enough. Having talked with members of the public, I had a strong sense that the cap was set too high. After all, a family going out to work would have to earn £35,000 in order to net the equivalent £26,000, as my hon. Friend the Member for Weaver Vale (Graham Evans) mentioned.
Amanda Milling
I am going to make progress, because I am conscious of time and the number of Members who wish to speak.
I therefore welcome the proposed reduction in the cap to £20,000 outside London and £23,000 in London, as set out in our manifesto and as included in the Bill. That is something the public support, as the general election result demonstrated. The Government received a clear mandate from the public on 7 May to introduce the benefits cap and the proposed reductions.
In my view, the benefits cap is a key measure at three levels. First, it ensures that our welfare system is fair, by making work pay and ensuring that those who can work are always better off in work than on benefits. Secondly, it ensures that our welfare system is targeted, by making sure that there is safety net for those people who most need support—the most vulnerable. Thirdly, it creates a welfare system that is sustainable, helping to get our economy and public finances on to a firmer footing and helping to reduce the deficit.
To date, the benefits cap has worked to meet those three objectives, helping to create a fair, targeted and sustainable welfare system. I believe that the measures set out in the Bill will help to deliver those further. The amendments that have been tabled would undermine that progress, so I will not be supporting them this evening.
Helen Goodman
I am pleased to follow the hon. Member for Cannock Chase (Amanda Milling) and will begin where she left off: on the benefit cap. It is quite clear that, as she has described, the public take the view that there needs to be a certain reciprocity and that there is a certain fairness in limiting the amount that individual households can receive. The question is whether the amounts are set at the right level and whether the right benefits are included.
The impact assessment that the DWP initially produced when it introduced the benefit cap stated that the object of the policy was to get more people into work. That raises a question about how sensible it is to include carer’s allowance, since carers are already busy caring, and maternity benefits, since people claiming those will obviously have little babies to look after. The Government should think more carefully about those proposals.
Michelle Donelan (Chippenham) (Con)
The hon. Lady mentioned six applications a week. Just to clarify: is that less than one application a day?
Helen Goodman
It depends what kind of job is being applied for and how long it takes. I do not know how many applications the hon. Lady made when she was unemployed. Obviously, if they are simple job applications, one can make more. My point was: the young man had made 27 and he was sanctioned. Does she think that a sign of somebody malingering or a sign that people in the jobcentre were playing games? I put it to her that it was not a straightforward way to treat this young man. It was not encouraging or supportive; it was demeaning and demoralising, and it should stop. Ministers should ensure that the sanctions rules are properly applied.
The big study on sanctions carried out by Glasgow University found that one person in four on JSA had been sanctioned. I am sorry, but I think there is the intention on the part of Ministers to massage down the JSA numbers. Of course, the number of people unemployed has fallen and employment has risen—everybody is pleased about that, and nobody wishes to deny it—but I think there is an attempt, through sanctions, to massage the JSA numbers and pretend that there is not an unemployment problem. When I went to the Bishop Auckland jobcentre, I was told that half the people claiming JSA there had been unemployed not for more than 12 months but for more than three years. This is a serious problem, but the Government are not addressing it in a serious way.
Paul Scully
The hon. Lady might make a stronger case if she were looking at the unemployment figures alone. The fact is, however, that we now have record levels of employment in this country. They are at their highest since the statistics first started to be recorded. Does she not agree that that shows a move from unemployment to employment?
Helen Goodman
The statistics are quite dubious, in a number of ways. Let us consider, for example, the number of people who have gone into self-employment because they have not been able to find proper jobs, and the extent of under-employment.
Paul Scully
As someone who has been self-employed for the best part of 20 years, I find that quite offensive. Is the hon. Lady seriously telling her constituents that self-employment is not a proper job?
Helen Goodman
Is the hon. Gentleman aware that self-employment has increased by 42%? How many of those newly self-employed people does he think are in sustainable small businesses? People come to my constituency surgeries who have become self-employed and are working as window cleaners. That is fine—of course everyone needs to get their windows cleaned—but there is a limit to how many window cleaners we need in society. If people are coming out of highly skilled jobs and going into very low-skilled ones—[Interruption.] Conservative Members can protest as much as they like, but when the Treasury Committee took evidence from representatives of the Bank of England, they told us that a lot of the increase in self-employment was not real employment and that it was a sign that people could not get the kind of employed jobs that they wanted. Professor Kristin Forbes said precisely that to the Committee. Conservative Members do not need to pretend that this is some kind of prejudice on my part. It certainly is not.
Neil Coyle
Much has been said about the current employment levels. Indeed, we heard earlier that there had been a miracle, no less. Is my hon. Friend aware that the percentage of working age disabled people in work has fallen over the past five years, in direct correlation to the reduction in the number of disability employment advisers and in the number of disabled people being supported by the Access to Work scheme?
Helen Goodman
I was not aware of that fact, and I am grateful to my hon. Friend for pointing it out.
On the employment numbers, I also want to point out that there are a lot of people on short-hours contracts. I am not talking about zero-hours contracts, which have now reached 750,000, as Conservative Members must know; I am talking about eight-hour and 12-hour contracts. They provide insecure employment and insufficient money for people to live on, and they make it very difficult to get other jobs. They are, however, recorded as employment. There is all the difference in the world between working 35 hours a week and working eight hours a week, and Conservative Members need to think about that before they start talking about miraculous employment figures.
Emily Thornberry
A snapshot of today’s jobs market would also reveal that 3 million people in this country identify as being underemployed. They are not working enough hours to be able to support their family.
Helen Goodman
My hon. Friend has expressed that beautifully.
I shall move on to the question of employment and support allowance. Again, hon. Members need to think about the overhang from the heavy industries and the impact that reductions in people’s income has on those individuals and on whole communities. I suppose this seems quite unusual to those representing a constituency whose casework consists of a lot of neighbour disputes and planning issues, and where only one person a week turns up with a benefits problem, but in a constituency like mine—a former mining constituency in an industrial area—the bulk of the casework is this sort of thing. The cuts Conservative Members are proposing to vote for tonight will have a devastating impact on the amount of money in the local economy, as well as being very unfair to people who are not going to be able to go back to work.
Finally, I want to make one observation on universal credit and lone parents. It is not reasonable to have the same conditionality for a lone parent with children under school age as for people in couples. The practicalities of looking after children are different for lone parents and for married couples. Ministers in the Parliament before last changed the rules so that the conditionality for lone parents was aligned to the tax credit system, and the period was 16 hours instead of 30 hours for people in couples. Ministers must help people balance their parenting responsibilities and their working responsibilities better.
Jo Churchill
I was fortunate enough to sit on the Public Bill Committee, and I also sit on the Women and Equalities Committee. That has shown me two things. I recently spoke to women in Oldham running a voluntary group, and the leader said to me she did not feel what we were doing was wrong, because she felt these measures helped marginalised minority women break out of the cycle of being kept in their homes, improved their English and helped them understand how their families interact with the wider world, asking women to find work and not rely on—
Madam Deputy Speaker (Natascha Engel)
Order. The hon. Lady is making a speech, not an intervention, so I ask her to resume her seat.
Helen Goodman
People can take different views on this matter, and I have just been describing the view I take with respect to lone parents.
I want to make one final point. Conservative Members have repeatedly said that the Opposition have no proposals for savings and they are the only ones who are concerned about the deficit. The Opposition voted against the inheritance tax cuts, which will benefit the richest 60,000 households, and we went into the last general election with a proposal to cut the winter fuel allowance for wealthy pensioners. Personally, I think that would be a better thing to do than hit disabled people once again.
Jeremy Lefroy (Stafford) (Con)
I am going to speak extremely briefly to amendment 29 in my name and that of my hon. Friend the Member for Stevenage (Stephen McPartland), which asks the Government to look again at withdrawing the full amount of the WRAG component, which affects approximately 492,000 people. Let me briefly explain the reasons.
First, as the hon. Member for Banff and Buchan (Dr Whiteford) mentioned earlier, many in the WRAG are in that group for a long period—two years or more, compared with six months on average for jobseeker’s allowance, for instance. As she said, it is extremely difficult to exist on these levels of income for long periods, whereas it might be possible for a few weeks or even a few months for those with other kinds of support. It is therefore important that we look at the length of time.
Secondly, the costs for people in this group are often higher. It has been said to me that the personal independence payment will compensate. It will not compensate for all those costs; for instance, heating is not part of PIP, nor are the special diets people may have, although caring and mobility are part of PIP, of course.
Thirdly, there is the question of the incentive. Because the support group has a component of £36.20 a week at present as opposed to the WRAG of £29.05 a week, which it is proposed to take away, there will be the incentive and a tendency for people to be put into the support group rather than the WRAG. Surely the whole point is to bring people into the WRAG so that they can be given support to come back into work. For instance, 30% of people with Parkinson’s are wrongly placed in the WRAG. This means that instead of receiving the £29.05 component a week, they will receive nothing in future. I have seen instances of people placed in the wrong group in my constituency.
We are talking about a benefit where sanctions are wrongly applied in a number of cases, as has been mentioned in the debate. I need to be very brief and I apologise for not making my points in more detail, but I want others to come in. I ask the Minister to come back on this—
Mr David Burrowes (Enfield, Southgate) (Con)
This may be an opportunity to mention amendment 31. I recognise my hon. Friend’s concerns. What we need is specialised tailored employment support. I understand that in Committee the Minister agreed to come back in the autumn with details of what support the Government will give when the package rises from £30 million to £100 million. The sooner we get those details, the better.
Jeremy Lefroy
I entirely agree that we need specialised tailored employment support, but people also need cash to pay their heating bills. That is extremely important and needs to be borne in mind.
Finally, I was not quite clear from my hon. Friend the Minister’s remarks earlier whether the freezing of benefits applies to those in the WRAG who will be on the present JSA rate of £73.10.
Natalie McGarry (Glasgow East) (SNP)
I am grateful for the opportunity to speak in this crucial debate. I congratulate and welcome to her place the shadow Minister for disabled people. She made a fantastic contribution.
I support amendment 56, which was introduced by my hon. Friend the Member for Banff and Buchan (Dr Whiteford). The proposed changes to the employment and support allowance and the potentially devastating cuts to the work-related activity group are of particular interest to me as the disability spokesperson for the SNP.
This Government say that the Bill will support our economy and improve support for those who need it, but it is clear that it is a deeply damaging and divisive piece of legislation which will harm workers, families and communities and will exceed even the worst excesses of the Thatcher Government. The Tories’ approach to social security has been deeply destructive, and has damaged the vital social fabric that binds our society together. Liz Sayle of Disability Rights UK says that the language used in this context conveys a sense of suspicion of disabled people, as though they were trying it on to get free transport and handouts. That suspicion is completely misplaced, but is reinforced by the policy and rhetoric of this Government.
This Government’s cuts are systematically undermining the life chances of working people, especially children and young people across the UK. It is an ideological attack on the most disadvantaged—a war not on poverty, but on the poor. But despite my fervent opposition to the Bill, and my vocal opposition to this Government’s policies, I want to take the opportunity to reach out to Members right across the House. I understand the desire to support people into work, and to create a system where social security supports those in need and encourages those who can work to do so. That ambition, I believe, is shared by all of us across the House. However, I cannot see how Members on the Government Benches can say with any integrity that this Bill furthers our common aim.
We already know that many people who are currently unfit for work are dubiously placed in the ESA work-related activity group, and that DWP policies already force WRAG claimants to meet arduous bureaucratic requirements simply to receive the financial support they rely on. We already know that the UK Government’s austerity programme is impacting disproportionately on those living with disabilities and sicknesses and that it impairs their ability to work. We also know that there is absolutely no evidence that these policies of cuts will have a positive impact on moving those in the WRAG group into work. There is no evidence from the Government, despite repeated requests for it to be produced. It is therefore absolutely shameful that, without any evidence, the Conservatives should have disabled people in their sights yet again, promising to cut nearly a third of ESA support for new claimants in the work-related activity group.
It is also deeply distressing for many claimants that the Government intend to freeze ESA WRAG support for the next four years, failing to protect this important social security payment against the rising cost of living. When it comes to people with long-term sicknesses and disabilities, however severe, and the support they need, the Government simply do not get it, and for too many it seems that the Government simply do not care. We talk about language, and we have a Secretary of State who has shockingly made a distinction between disabled people and “normal” people. We have a Government that have continually introduced policies that isolate disabled people and distance them from their communities and support, risking institutionalising people in their own homes.
It is quite unfathomable why the Conservatives think that those with illnesses and disabilities should not have their special requirements and challenges recognised in the level of support and care that they receive. By reducing ESA for WRAG claimants to the level of the general jobseeker’s allowance, the UK Government are undermining the entire purpose and principle of ESA, which was always intended to support those with particular challenges in entering employment more gradually than those on jobseeker’s allowance.
By targeting disabled people for the latest cuts, Government Members do nothing more than demonstrate an utter unwillingness to listen to the needs of disabled people and disability organisations. As a disability spokesperson for the SNP, I spent the past few months speaking with and listening to people across the UK. I heard from organisation after organisation, I heard statistic after statistic, and it is clear the harm this Bill will cause. I cannot see him in the Chamber this afternoon, but who has my counterpart on the Government Benches, the Under-Secretary of State for Disabled People, been talking to? An echo chamber?
According to a new survey conducted and released today by the Disability Benefits Consortium, almost one third of people on ESA who were surveyed say that they cannot afford to eat on the levels of ESA that they receive now. Do the Tories intend to starve those people into work? To me, that is not just morally repugnant but economically incoherent and illiterate. Inclusion Scotland has said that the proposals are
“a direct attack on the living standards of disabled people, their families, carers and children and will result in hundreds of thousands more being plunged into poverty and destitution”.
To talk about levels of destitution in 2015 is an outrage and we cannot simply stand by and let these people’s lives be sacrificed on the altar of fiscal responsibility. Surely no civilised society would penalise the disabled and disadvantaged in the pursuit of an ideological austerity obsession.
I know that my constituents will find it difficult to fathom how the Government can introduce such harmful proposals and I sincerely hope that Government Members at least have significant concerns about them, too.
Graham Evans
I am most grateful to the hon. Lady for giving way. I welcome her to this place; she makes a powerful point and a huge contribution. Disability and carer benefits for working age people in 2014-15 were £11.4 billion and in this new financial year of 2015-16 they are £11.5 billion. The hon. Lady is talking about cuts, but the spending has gone up, not down.
Natalie McGarry
I thank the hon. Gentleman for that point. These are real-term cuts and many people have disappeared from the system because of its complexity and because of their fear of it.
With every Bill in this Session, we have a chance to act in concert, to set out the direction of our country and to make it clear what and who is important. I look to all Members, on both sides of the Chamber, to look to themselves and to their consciences and not just to their Whips. I implore Members from all parts of the House to put themselves in the position of the half million people who will be affected by these cuts—I am talking about those with mental ill health, learning disabilities, autism, Asperger’s and all the families involved—and vote in solidarity with them. They are real people, so Members should vote for amendment 56.
Victoria Atkins (Louth and Horncastle) (Con)
I wish to speak to new clause 7, amendments 35 to 48 and new clause 6.
I had the very great privilege of sitting on the Committee for this Bill and I have heard arguments from all parts of the House. There is one point in relation to new clause 7 that we looked at in Committee and that I wish to develop further today, and that is the principle of making work pay. The benefit cap has been criticised by some Opposition Members, but the reality is that, in my constituency, it is a very popular policy. The median salary in my constituency is £480 per week, which is less than the cap currently in place for benefits of £26,000. The point has already been made, and indeed we looked at it in the Bill Committee, that that £26,000 figure is equivalent to a gross figure of £35,000.
Victoria Atkins
In a moment if I may. Let me just finish this point. This effort to make work pay is to be welcomed and not criticised.
Emily Thornberry
I pointed this out to the hon. Lady in Committee, but I am grateful to have the opportunity to point it out to her again. If someone had a median income in central London, they would be on benefits, because it is accepted that people cannot live on £26,000 in central London and pay their rent.
Victoria Atkins
As I responded in Committee, I understand that the hon. Lady represents a London constituency, but I do not. I can only speak for what I think is right for my constituency and the area outside London.
We are talking here about a package of measures. I know that Opposition Members do not like to draw together all of its different threads, but this is a package. The ripple effect of the national living wage includes commitments—
Victoria Atkins
No, I will not give way, because I wish to develop this point. The ripple effect of the national living wage includes commitments by at least two employers in Louth and Horncastle—I am talking here about Morrisons and Sainsbury’s, but there may be many more that have not yet declared their intentions—to raise their lowest wages to more than the first stage of the national living wage, which will take effect in April.
Victoria Atkins
I will not give way, thank you.
The point is that the policy is part of a package, and the principle behind it is to make work pay. The criticisms that we are hearing from Opposition Members highlight how different our approaches are. We want to create a culture of employment. We believe in work and in all of the benefits that work brings to people.
Our responsibility as a Government is to make work pay, but we cannot do that if the system means that some people are better off out of work than in work. That does not make economic sense. We know that, since the cap was introduced, at least 16,000 capped households have moved into work. That is a good thing for those households. We know that those people who are now working are spending their money in the local economy. A strong local economy pays for the things that we care about—hospitals, teachers, the armed services and so on.
As we saw on the Bill Committee, what counts is not just the pay packet, but what it brings to people’s lives in terms of life chances, the positive benefits that it has for children in a working household and the examples it sets for those children. Those are all factors that are part of this package that some Members seem keen to avoid.
We know that households subject to the current cap are 41% more likely to get into work than uncapped households. I join my hon. Friend the Member for Weaver Vale (Graham Evans) in congratulating the Government on making the commitment that the money saved through this measure will be used to help fund more apprenticeships. It is about getting people into work and into training. We should celebrate, not criticise, the fact that unemployment and the number of out-of-work claimants is at its lowest level since 2010. The fact that we have these very low claimant rates, these measures and this determination to make work pay is something to be supported and not chipped away at.
Mr Speaker
Order. Before the hon. Lady continues with her speech, I want to notify the House that I would like to secure a contribution from the hon. Member for Bootle (Peter Dowd), which will be brief, as I must leave time for the Minister. I therefore feel confident in expressing the hope that the hon. Lady is approaching her impressive peroration.
Victoria Atkins
I am grateful, Mr Speaker. This is a very quick point.
The concept of job quality is beguiling, but how on earth do we define it? I am conscious that I may be about to upset the hon. Member for Bishop Auckland (Helen Goodman). I am going to describe a real-life job. Someone in their early 20s worked six days a week, or seven on occasion, without a break and far beyond nine-to-five, earning so little that she did not pay income tax in her first year, with no pension, no sickness pay and no holiday pay. Some Members might think that the quality of that job was very poor, but the opinion of the person who had it was that it was a great stepping stone into a very fulfilling career. I can say that because it was my first job. The hon. Member for Bishop Auckland laughs. I do not for a moment recommend it as a first job; we must all find our own courses in life. Nevertheless, how on earth do we define the quality of a job? I fear that this new clause would be a lawyers’ paradise—and I know whereof I speak.
Peter Dowd
It is often my lot to be well down the batting order, although I prefer bowling.
Until last night, when they were fortunately brought down to earth by the other House, the Government were pushing on with their tax credit proposals. They are still pushing on with them, despite the fact that the Chancellor is, he tells us, in listening mode, and the fact that there is no palpable or sustainable action to move to a higher-wage economy. They are tinkering at the edges. This proposal affects working mums; as I said earlier, 70% of the burden is falling on them. It affects low-income families. It damages work incentives, despite what the hon. Member for Louth and Horncastle (Victoria Atkins) said. It affects the working poor. It will have a dire effect on those with chronic illnesses, particularly with mental health problems.
The question we have to ask is whether this proposal will make work pay and help people back into work. Many say no. Some have suggested alternatives for where the extra funding can be found. I am not saying whether I agree or disagree with them, but it gives the lie to the claim that there are no alternatives. Despite issues of phased implementation, inheritance tax, relocation of planned spending on the personal allowance, marriage allowance changes, help with childcare costs, working tax credit and universal credit, there is still no guarantee of higher wages.
The provisions on ESA and the WRAG were introduced specifically to assist with support for disabled people who were assessed as not being fit for work according to the Government’s own assessment regime. Some people, such as those with chronic mental health problems, find it difficult to work. The Work programme has supported only 9% of participants on ESA with mental and behavioural disorders into sustained employment. We have parity of esteem, but not for those on welfare. Support for those people has to be tailored to their needs. There can be a slow journey back to health. People need advisers with particular skills and they are not getting them, so how do they possibly get back into work?
As for the sanctions regime, a Church group in Scotland identified that 100,000 young people were affected by sanctions, that they were being debilitated by them and that the sanctions undermined their humanity. Yes, sanctions have existed since 1913, but they have to be humane and those under discussion are not.
The Minister for Employment (Priti Patel)
We have had a long and interesting debate on a range of amendments. I thank every colleague who has contributed to it, particularly my hon. Friends the Members for Faversham and Mid Kent (Helen Whately), for Beverley and Holderness (Graham Stuart), for Weaver Vale (Graham Evans), for Stafford (Jeremy Lefroy), for Bury St Edmunds (Jo Churchill), for Chippenham (Michelle Donelan) and for Louth and Horncastle (Victoria Atkins).
Given that time is short, I will speak very briefly to some of the amendments. On amendments 35 to 48, we introduced the benefits cap in order to increase work incentives, to promote fairness between those in work and those on benefits, and to not only help to address the deficit but to support people back to work. The benefits cap has been a key part of our reforms to the structure of the welfare system and to attitudes towards getting back into work.
It is clear from the evidence that the cap is working. Since the cap was introduced in 2013, more than 6,000 previously capped households have moved into work and more than 41% of capped households are likely to go into work. That trend did not exist before the cap, and those with higher weekly benefit payments used to be less likely to move into work. We have had some great results and we intend to build on them and to align the cap with the circumstances of many hard-working people throughout the country. We firmly believe that the new, tiered benefit cap will continue to build on those successes and that it will do more to improve work incentives throughout the country while promoting greater fairness when it comes to work and employment.
There was an extensive debate on amendments 56, 20, 57 and 31 on universal credit and the employment support allowance. The removal of the work-related activity and limited capability for work component will apply only to new claims. There will be no cash losers among claimants already receiving the rate, and clauses 13 and 14 do not affect the support group component.
In 2008, when the then Labour Government introduced ESA as a “radical reform package”, the work-related activity component was originally intended to act as an incentive to help people into work and to return quickly to work. However, the original estimates were incorrect and only 1% of people in the work-related activity group left the benefit each month. It is clear, therefore, that the existing policy is not working and that it is failing claimants.
As discussed in Committee and this afternoon, we believe that it is the duty of Government to support those who want to work to do so, particularly those with disabilities and health conditions who want to work, including the majority of ESA claimants. We know that 61% of those in the WRAG want to work. We will do everything we can to support them in that ambition, and it is right that we do so.
Universal credit supports people with small or fluctuating amounts of work. That is why it is particularly helpful that we look at the ESA component and universal credit together. It is that alignment that will help to bring people closer to work while tailoring the support they need to move into work. As part of the package of savings in the summer Budget, the Government were able to allocate new spending to ESA that would not otherwise have been available. That support is now funding up to £100 million per year to help claimants with limited work capability but who have potential, because they want to move into work, to get closer to the labour market. We will provide all the support necessary to make sure that they can get back into work.
Comments have been made about work coaches and jobcentres. May I reassure the House that all work coaches are trained to help claimants and that that is not based on the benefit they are on, but, importantly, on the actual support they require? That is particularly true for universal credit. The training for staff working with ESA claimants focuses on raising awareness of their individual circumstances and recognises that disability and health conditions affect individuals in different ways. Such factors change over time but, importantly, we will support claimants in their journey to get back into work.
We have had a debate about sanctions. Of course sanctions exist for a reason. Importantly, however, they also exist to support people into work. I recognise that many Members from both sides of the House have specific cases to which they have referred. I again extend my offer to look into such cases. The Government keep the operation of sanctions under constant review. We have clearly made a number of improvements to sanctions, including in relation to the Oakley review. Last week, we gave a very clear response to the Work and Pensions Committee report. Our response outlined the work that the Department has already undertaken to review the sanctions system and the changes we intend to make. The response was welcomed by the right hon. Member for Birkenhead (Frank Field), the Chair of the Select Committee.
Our response to the Committee includes the announcement that we will trial a sanctions warning system, which will give claimants a further opportunity to work with jobcentre work coaches to provide evidence before a sanction is applied. We will consider extending the definition of at-risk groups for hardship purposes, including those with health conditions—particularly those with mental health conditions—and those who are homeless, which means that they can seek access to hardship payments from day one of the sanction.
We want the sanctions system to be clear, fair and effective in promoting positive behaviours. Importantly, however, it should also support individual claimants, which is why we will continue to keep the system under review. I will make it very clear: there are no targets for sanctions, a point made on the Floor of the House this afternoon. I say to the hon. Member for Bishop Auckland (Helen Goodman) that she was wrong in her remarks not just about sanctions but about employment levels in this country and clearly about the economy.
On new clause 3, I thank my hon. Friend the Member for Beverley and Holderness, the hon. Member for Bermondsey and Old Southwark (Neil Coyle)—he was consistent in making points in Committee—and my hon. Friends the Members for Bury St Edmunds, for Gloucester (Richard Graham) and for Weaver Vale for their contributions. The PIP assessment is designed to treat all health conditions and impairments fairly. I assure all hon. Members that we consider the needs of those who are terminally ill in developing the assessment, and that we absolutely remain committed to providing support to disabled people and those with illnesses in all their circumstances. We know that such claimants, especially those who are terminally ill, have particular challenges.
I listened to all the contributions in Committee. As the hon. Member for Bermondsey and Old Southwark knows, I am meeting him tomorrow, with the hon. Member for Sheffield Central (Paul Blomfield), to discuss this matter further. I look forward to working with him on the points he has made, as well as on those expressed by my colleagues. The hon. Member for Bermondsey and Old Southwark was right to refer to the fact that rules have been introduced to ensure that the PIP system handles terminally ill claimants efficiently and sensitively, reducing the need for face-to-face assessments—we discussed that at length in Committee—and the degree of intrusion on claimants and their families, while, importantly, focusing on delivering vital support to claimants as quickly as possible.
It is very clear, as we discussed in Committee, that the Government are focused on rolling out PIP in a very safe and steady manner, ensuring that the claimant experience is protected and that the PIP system is as straightforward as possible for the user, particularly those who are terminally ill. PIP has been and will continue to be subject to independent reviews—we have committed to that in legislation—which, as ever, will help us to make continued improvements to what is a dynamic benefit. We are fully committed to ensuring that there is a positive evidence base for all changes that we make and that users understand their impact so that we can deliver the best possible service for claimants.
We will continue to work with all hon. Members, as I have said in Committee and this afternoon, as PIP is rolled out. I will continue to work with colleagues and to take on board their points. I thank them for their valuable contributions. The hon. Member for Bermondsey and Old Southwark has expressed some concerns, but I will take away his points for our meeting. I look forward to taking forward such considerations.
In summary, the Bill brings forward important changes that are designed to create the right incentives within the welfare system, and I urge hon. Members to withdraw their amendments.
Priti Patel
I beg to move, That the Bill be now read the Third time.
The Bill, alongside other measures, including the national living wage and the increase in the personal allowance for income tax, will ensure that the welfare system is fair to taxpayers while supporting the most vulnerable. It will help ensure that work always pays more than life on benefits. It will continue to build an economy based on higher pay, lower taxes and lower welfare.
Ian Lavery
As a result of these measures, people receiving family tax credits will lose up to £1,300 per annum and 200,000 more children will be pushed into poverty. Can the Minister explain how that is fair?
Priti Patel
I thank the hon. Gentleman for giving me the opportunity to respond once again on that issue and to make the case that, first, it pays to be in work, and secondly, through our package of measures, including the national living wage, the increase in the personal allowance and the extra support for tax-free childcare, families will be supported through the changes we are making. That contrasts with the system we inherited from Labour in 2010, which was not fair to the hard-working taxpayers who paid for it, and certainly did not support people trapped in a system of welfare, with no hope for a brighter future. That is why we are continuing to reform welfare so that work pays in the United Kingdom.
After 13 years in government, Labour left a welfare system that failed to reward work. Between 1997 and 2010, spending on tax credits increased by 335%, compared with an increase in average earnings of just 30% over the same period. Despite all the spending, 1.4 million people spent most of the last decade under Labour trapped in out-of-work benefits. [Interruption.] That is not a ridiculous point to make. Over the same period, the number of households in which no member had ever worked nearly doubled and in-work poverty rose, yet Labour has opposed every decision we have taken to fix the welfare system and support people off welfare and into work.
Our welfare reforms are focused on transforming lives by helping people to find and keep work. We are focused on boosting employment and ensuring fairness and affordability, while supporting the most vulnerable, and on making sure that people on benefits face the same choices as those not on benefits and in work. Over the past five years, 2 million more people have entered employment, while 2.3 million people are now in apprenticeships and the number of workless households is at a record low—down by more than 680,000 since 2010. This was achieved in the last Parliament, when welfare spending increased at the lowest rate since the creation of the modern welfare system.
Mr Burrowes
The Bill delivers on our ambitious manifesto commitment to halve the disability employment gap, but we need to be held to account for the progress we make, so will the Minister outline how, through the reporting mechanisms in the Bill, we can show we are delivering on that commitment and build on the good progress we have already made in helping over 200,000 more disabled people into work?
Priti Patel
My hon. Friend is right about the Government’s clear desire to support more disabled people into employment, and as we discussed in Committee, we will strive continuously to fulfil that commitment. I can assure him that in everything we do, including through the £100 million of investment to help people with disabilities and health conditions—something that Labour did not do in government—we will share information with the public and report back to the country on our progress. The Government stand by the principle of encouraging and rewarding work, and the Bill builds on that success.
Naturally, we want more people to have the dignity of a job, the pride that comes with earning a pay packet and, importantly, all the wider advantages that come with employment. All those who want to enter employment and contribute to the growth of our economy should be supported to do so, which is why we are committed to full employment. The Bill will support that commitment with a statutory duty to report on our progress towards full employment and our ambition to deliver 3 million new apprenticeships. In addition, it will put in place a statutory duty to report on our progress in supporting troubled families with multiple, highly complex problems, including in helping them to move closer to work. It will encourage parents into work and support those trapped on benefits without the opportunity to move into work, such as those with health conditions or disabilities in particular. As my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) rightly highlighted, we will support them into work.
As a one nation Government, we believe that everyone in the country should have the chance to benefit from the security and sense of purpose that comes from being in work. Work provides purpose, responsibility and, in particular, role models for children, yet getting people into work is about more than earning a salary. Growing evidence shows that work can help people to remain healthy and help to promote recovery where somebody falls ill. It is right, therefore, that we look at how the system supports people with health conditions into work. We know that 61% of those in the work-related activity group want to work, but only 1% come off benefits each month. The system has failed them, and financial disincentives have left them trapped on benefits.
As we discussed in Committee and on Report, the changes in the Bill will apply to new ESA claims and universal credit from April 2017. This will enable us to provide significant new funding for additional support to help claimants with health conditions and disabilities into work and to transform people’s lives. Furthermore, we are providing £60 million of funding in 2017, which will increase to £100 million a year by 2020. That will be direct support to get people into work and provide new employment opportunities for those who want to work but have been unable to do so. We recognise the long-term conditions that some people face and will support them back into work.
Jeremy Lefroy
That help into work is absolutely vital, but what would the Minister say about those who have been in the work-related activity group for one or two years, or perhaps even longer, and who are unable to get back into work, however hard they try? New claimants will not have that work-related activity group component.
Priti Patel
We recognise that there are people who cannot work, as a result of illness, and they will be in the support group. They will absolutely be supported in that group, as is right and proper.
It is our responsibility to ensure that the welfare system is affordable and sustainable. Those on the Opposition Benches who oppose our making difficult decisions on welfare must say what they would cut or which taxes they would put up to pay for their proposals. The Bill will correct many of the unaffordable and disproportionate increases in benefits compared with earnings by freezing most working-age benefits. As we have said throughout the passage of the Bill, this will protect taxpayers from the cost of subsidising increasing social housing rents through housing benefit. Those rents have climbed by 20% since 2010, but we will now act to reduce them by 1% a year for the next four years.
The Bill will continue to restore fairness to the system. We do not think it is fair that someone on benefits should receive more than working households earn, and 77% of the public agree. The benefit cap reintroduced fairness. Reducing the benefit cap to £20,000—and to £23,000 in Greater London—reinforces and strengthens that message. The new cap better aligns the level with the circumstances of hard-working families across the country.
Paul Scully
Does the Minister agree that, as well as providing a fairer deal for the taxpayer and introducing a fairer, more sustainable system in order to help to pay off the deficit, this programme will help to encourage, nudge and support people back into work? Is that not better than just wringing our hands?
Priti Patel
My hon. Friend is absolutely correct. That is the whole purpose of what we have been doing through our welfare reforms. We are putting people first and providing the support they need to get back into work, in contrast to what we saw during the 13 years of the Labour Government, when people were trapped on benefits in a cycle of dependency, and trapped in poverty while having opportunities denied to them.
This Government are committed to working to eliminate child poverty and to improving life chances. Our new approach focuses on transforming lives, which is what the Labour Government failed to do through their arbitrary measures on poverty. We will tackle the root causes of poverty rather than focusing on the symptoms, as existing measures do. We saw the previous Labour Government’s pursuit of short-term, narrow and expensive policy solutions that attempted to lift incomes above an arbitrary line. They increased welfare spending by 60% in real terms—[Interruption.] That is a fact. They increased spending in an attempt to chase that moving poverty line, without driving any sustainable improvements in children’s lives.
In contrast, the Bill will place a duty on the Government to report annually on the key measures of worklessness and educational attainment. In these new life chances measures, we will focus on the root causes of poverty, rather than on the symptoms. That approach has been seen to fail—[Interruption.] The hon. Member for Islington South and Finsbury (Emily Thornberry) can shout all she wants, but these new measures will drive real actions and make the biggest difference to disadvantaged children now and in the future. We have also committed to publishing a life chances strategy—[Interruption.] What is embarrassing is that during 13 years, the Labour Government systematically failed to deal with the root causes of poverty or to change people’s lives by getting them back into work.
Priti Patel
I will not give way.
We are committed to publishing a life chances strategy, which will set out a wider set of measures on the root causes of poverty such as family breakdown and the problems of debt, drug addiction and alcohol dependency. We will report to the House on those measures annually. We are absolutely committed to protecting the most vulnerable in society, and the Bill will continue to ensure that the welfare system will support the elderly, the vulnerable and disabled people. We are exempting pensioner benefits, and benefits relating to the additional costs of disability, from the freeze on working-age benefits. We are also exempting the most disabled people from the benefit cap.
I would like to thank all Members on both sides of the House for their contributions on the Bill and on the other important issues that have been raised in our debates in Committee and on the Floor of the House. A number of amendments have been passed so that support for mortgage interest and social rented sector policies are delivered as intended. In the case of the social rents measure, we have been able to reflect comments made to the Government by the social housing sector. We have also added a clause that will enable the Government to recover the expenses they incur from administrating benefit diversions for the Motability scheme. As we agreed on Report, the wishes of the Welsh and Scottish Governments are now also reflected in the life chances measure.
This Bill will establish the principle of economic security, and will ensure that the welfare system is fair to taxpayers while continuing to build an economy based on higher pay, lower taxes and lower welfare. I commend the Bill to the House.
Owen Smith
May I start by thanking everybody on the Opposition Benches for all the contributions they have made not just today, but during the passage of this enormously important Bill? May I also thank the Secretary of State for gracing us with his presence today? I would like to be able to thank the Minister for offering some detailed answers to the questions put to her throughout the Committee stage and today, but there were not many answers, so I will not be able to do that, I am afraid.
Labour will be opposing the Third Reading of the Welfare Reform and Work Bill. Combined with the other measures in the summer Budget, this package of tax credit and benefit reforms penalises millions of working families and will risk pushing hundreds of thousands of children into poverty. It is a cruel, pernicious Bill that breaks Tory promises in almost every clause and will hit more than 10 million families in Britain. It is also indiscriminate: it hits the young, the old, those unable to work and those working every hour they can.
Andrew Gwynne (Denton and Reddish) (Lab)
I am pleased we will be opposing the Welfare Reform and Work Bill on Third Reading. Is not the real problem for the Government that their record so far on welfare reform has been entirely counterproductive? The facts speak for themselves: on this Government’s watch welfare bills have shot through the roof. They have cut welfare, but the bills have gone up.
Owen Smith
This is the first Government who have ever spent more than £1 trillion in a Parliament on social security. That is an extraordinary rise, and it has happened on the watch of the Secretary of State for Work and Pensions.
In this Bill we are seeing the Government break their promises repeatedly. They are breaking their promises to older people, for example. Before the election, the Conservatives’ manifesto said they would “maintain all pensioner benefits”, but after the election it appears that there is a different story. Some senior Conservatives have talked about this being a “great opportunity” for deep cuts to pensioner benefits. The Minister for Community and Social Care said that pensioner benefits should not be cut immediately, but that raises the question: when are they going to cut them?
The answer appears to be that the Government are cutting pensioner benefits now, in this Bill, because 70,000 pensioners are being hit by more than £1,000 a year through the changes to support for mortgage interest. That support is a vital lifeline for many, but through this Bill the Government are chipping away at pensioner benefits and charging a 2.9% interest rate—profiteering from pensioners. By refusing our amendment 24, the Conservative party is breaking its promise to our pensioners. We will act as the watchdog for our older people on that, as we will on pensioner freedoms. A scathing report from the Work and Pensions Committee has warned that the next great mis-selling scandal will be coming soon, after the Tories introduced pension freedoms. We will be watching that, as we are watching tonight.
Just as with older people, the Conservative Government are tonight letting down young people and our children. Before the election the Conservative manifesto spoke of
“boosting the self-esteem of young people”,
but after the election the Government are failing our children, failing young people and failing the next generation.
This Bill will push 600,000 children into poverty over the course of the Parliament while fiddling the figures and hiding the Government’s shame by abolishing the child poverty target. It is a scandal that any Government can seek to withdraw income—the money people have—from a measure of poverty. If it were not so disgraceful, it would be laughable. They are stripping housing benefit away from 18 to 21-year-olds, patronising our young people with “earn or learn” boot camps and introducing a so-called living wage that kicks in only when people are 25, and the Business Minister is running down young people, saying that they do not deserve a living wage because they are not as productive.
What about the Tory promises to the sick and disabled people of Britain? Before the election the Tory manifesto said that the Conservatives would
“aim to halve the disability employment gap: we will transform policy…so that hundreds of thousands more disabled people who can and want to be in work find employment.”
But what is the truth? After the election, they are cutting support for sick and disabled people. Half a million people in the ESA WRAG are set to lose £1,500 a year. That will reduce the likelihood of a return to work, increase the number of long-term unemployed and act as a work penalty for sick or disabled people seeking to get back into work.
Alex Cunningham (Stockton North) (Lab)
I was told today by Homeless Link that 50% of the charities providing specialist housing services say they will be forced to close services within one to five years because of the changes in the rent arrangements for housing associations and housing benefits. Does my hon. Friend know what will happen to the vulnerable who depend on those services?
Owen Smith
I suspect that their lot will be far worse, as with so many of the groups that I am talking about tonight. We know that young people, older people, disabled people and vulnerable people in our communities are going to be worse off under the Tories, because they always are.
Owen Smith
What about working families, the very group that this Tory party chooses to try to speak for? Before the election, the Tories said they would not cut tax credits. The Justice Secretary said:
“We’re going to freeze them for two years, we are not going to cut them.”
That was the promise. We know the truth. After the election, the Government are stripping £1,300 out of the pockets of 3.5 million working families—a 10% cut in the incomes of working families, putting an effective 93% tax rate on low and middle-income workers and imposing a work penalty on those families.
Owen Smith
I had not heard the hon. Gentleman. He needs to speak up. I give way to him.
Mr Burrowes
The hon. Gentleman is very kind. Will he speak up, loud and clear? He says that he and his party will oppose the Bill, so what are their alternatives? How would they meet the £12 billion savings package? What parts of it will they accept, and what are their alternatives? We want to know the basis of their opposition.
Owen Smith
I could, of course, refer, as I have done repeatedly, to not cutting inheritance tax for people passing on million-pound houses; I could talk about not introducing the millionaires’ tax cut; I could talk about clamping down on tax avoidance and evasion. But the real question is for the working families in the hon. Gentleman’s constituency, thousands of whom are going to see 10% of their income carved away at the stroke of a pen, in a letter arriving just before Christmas. It is a disgrace what this Government are doing. We are clear that we are opposing it tonight and will continue to oppose it. Asking working mothers to shoulder 70% of the cuts is no way for any Government to continue.
This Bill is a litany of broken promises. The risk of job loss, sickness, bereavement or retirement faces all of us at some point, yet this is a Tory bid to undermine the basic case for support and security for individuals through the collective pooling of risk. The Bill is a naked attempt to turn people against one another, in order to undermine any concept of a safety net—young against old, disabled people against non-disabled people, those in work against those looking for work.
The Opposition will not play that game. We are not interested in those divisive Tory tactics. We all want to bring down the welfare bill by making work pay, getting the homes we need built, bringing down unemployment and growing our economy, helping our foundation industries, such as the steel industry, which is being abandoned by the Government—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Bacon, you are getting carried away. That is not like you. You are usually a man who wants to hear both sides of the argument. Don’t spoil it tonight.
Owen Smith
I am very grateful to you, Mr Deputy Speaker.
The Tories faced a humiliating and deserved defeat last night in the House of Lords, in part due to their failure to outline where cuts will fall and being less than open about their intentions. Just like their cuts to tax credits, this Bill breaks the Conservatives’ manifesto promises—pledges to protect pensioners, to support the young, to help the disabled into work and to back working families. This is a cruel Bill that shows that the Tory manifesto was not worth the paper it was printed on. It penalises children, takes money from low and middle-income workers, drives families from their homes, punishes disabled people and will push hundreds of thousands of children into poverty. We will oppose it tonight.
Peter Heaton-Jones (North Devon) (Con)
It was a pleasure to serve on the Public Bill Committee along with hon. Members from both sides of the House who I can see in the Chamber. I sat through many sittings of the Committee, listening intently to all that was said, and I simply fail to recognise a lot of what the hon. Member for Pontypridd (Owen Smith) said about what the Bill will do. I do not know how much of the Committee he sat through.
We have made great progress on the economy since 2010, and it is worth recording some facts. I stress that they are facts. Employment is now at a record high of more than 31 million, up more than 2 million since 2010. That represents a record employment rate of 73%. I am always proud to talk about my constituency of North Devon, and the JSA claimant rate there is just 0.9%, a record low. Unemployment is almost back to its pre-recession levels—a recession, let us remember, caused by the Labour party—[Interruption.] The number of workless households is at a record low as well, down nearly 700,000—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I expect the same courtesy from Opposition Members as I expected from Government Members.
Peter Heaton-Jones
Thank you, Mr Deputy Speaker. They do not want to hear the truth, that is the problem.
Our welfare reforms over the last Parliament, every one of which was designed with the aim of supporting those who are able to work in getting closer to employment, were undoubtedly part of achieving the success story I have cited.
Mr Nigel Evans (Ribble Valley) (Con)
Is not the difficulty that the Labour party, in its last year in government, borrowed £150 billion, introduced a tax credit system that started at £4.5 billion and ended at £30 billion, maxed out not only the taxpayers’ credit cards but their children’s and grandchildren’s credit cards, and chained workers to a lower minimum wage instead of a much higher national living wage?
Peter Heaton-Jones
I agree with the powerful point that my hon. Friend makes. In fact, I am about to talk about the benefits cap that the Bill quite rightly introduces. The New Statesman, by any measure the house journal of the Labour party, states:
“Most voters regard a cap of £26,000 as unacceptably high and the move draws a sharp new dividing line with Labour. By pledging to use the money saved to fund apprenticeships, Cameron sends out the message that the Tories support work, not welfare.”
Peter Heaton-Jones
I will not give way, as we are short of time.
Let us look at what happened when the £26,000 cap was introduced: 16,000 households moved back into work, and capped households are 41% more likely to move into work. When asked, 38% of those who had been capped said that they were doing all they could to find more work and being supported by the Government in doing so. Those are important statistics that we must not forget.
I want to talk briefly, if I may, about some of the measures in the Bill on the help that will be given to people with disabilities. I am pleased to see on the Front Bench my hon. Friend the Under-Secretary of State for Disabled People. An SNP Member asked earlier where he was, and at that very moment he was in Westminster Hall speaking up for the people he represents, so we will take no lessons about that. I am working with the Minister to hold a Disability Confident event in my own seat of North Devon, because I want to ensure that people with disabilities can get closer to employment.
I am aware of the time, so I will conclude my comments. [Hon. Members: “More!”] I am very happy to provide more. We are moving from a high welfare, high tax, low wage economy to a society where work pays, where people earn more, and where the Government will help them to keep more of the money that they earn. That is the purpose of the Bill. That is why it is important that the House passes it; why it is right for the country; and why we should all support it in the Lobby tonight.
Dr Eilidh Whiteford
I will keep my remarks brief. This Bill has been the centrepiece of the Government’s austerity agenda, but the Government’s package of proposals was holed below the waterline by the vote in the House of Lords yesterday. The Bill’s measures are characterised by their arbitrary nature, by a total lack of evidence that they will achieve their intended aims and, above all, by the fact that low-income working households and the sick and disabled have been put on the frontline and are shouldering a wholly disproportionate share of the cuts.
Cuts to tax credits are at the heart of that agenda, with 7 million families set to lose an average of £1,300 each.
Dr Whiteford
I will not give way, because time is very short.
Those measures will drive disincentives to work and will compromise economic recovery. Above all, they will push hundreds of thousands of bairns into poverty. The benefit cap fails to tackle the underlying issue of an out-of-control housing market and a lack of affordable housing, and it hits those living in our most expensive urban areas. Cuts to employment and support allowance penalise people with serious and long-term illnesses and disabilities, and, to add insult to injury, stigmatise people for their own poor health. On sanctions, we have heard that the Government’s U-turn fails to address the need for a proper review of the sanctions regime. Those are the wrong choices to make. There is a responsible path to deficit reduction. There is a responsible alternative to austerity, and this Bill is not it.
However, we did not get a chance to debate the amendments in the third group this afternoon, so I wish to put it on the record that I welcome Government amendments 2 to 16, which take into account the concerns raised by the Scottish Government and other devolved Administrations.
This is a deeply regressive Bill. It harms low-income households and makes disadvantaged people carry the can of the Government’s economic failure. The SNP will oppose the Bill tonight.
Paul Scully
I regret the fact that, on Report, we have spent a lot of time—about a third of it—on yesterday’s debate. As important as that issue is, it has meant that we did not get to speak about our measures for full employment and for improving people’s life chances, especially with our troubled families programme. What I do not regret—in fact, I positively welcome it—is the clear and direct action taken by the Secretary of State for Work and Pensions and the range of Ministers who have worked incredibly hard so that Britain can deliver this Bill tonight.
The Bill means that, when we are looking at delivering a welfare programme, people who are in work and paying their tax will have the same expectations on housing and other choices when they have children as those who are not in work. The Bill is also for our children. We must pay off the deficit and, ultimately, our debt. By saving £12 billion through our overall package, we will be able to reduce the deficit significantly. Most of all, the Bill is about helping those who are most in need of our support. We have heard a lot of empty rhetoric from the Opposition parties, but what the Secretary of State and his Ministers have done in this Bill is to look at the underlying problems and at the underlying situation so that we can push people towards work. We will nudge, support and help them back into full employment. I very much welcome this transformational Bill.
Mark Durkan (Foyle) (SDLP)
Like other Opposition Members, I will oppose the Bill, because it does not meet the claims that the Government are making for it about making work pay. It will penalise people in work. Most of all, it will penalise families. It will penalise not just work but parenthood. The Minister told us that it is about making sure that families have to make the same choices as others. However, the two-child rule will not apply to childcare payments, and that means that up to £2,000 per child will be paid to relatively well-off people in employment, who will continue to get those payments for as many as children as they want. Only poorer families will be penalised by the two-child rule. That is just one of the injustices and inequities for which—
Business without Debate
electoral Commission
Cardiac Screening: Young People
(9 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mims Davies (Eastleigh) (Con)
I am grateful to you, Mr Deputy Speaker, for the opportunity to discuss the crucial matter of cardiac screening for our young people. I am delighted to be able to speak tonight because I did the 10-mile Great South Run on Sunday for CRY—Cardiac Risk in the Young—which raises awareness, supports screening and research, and assists bereaved families affected by cardiac risk in the young. You can look at its website to see its impact on cardiac arrest in our young people.
Cardiac arrest is a preventable and silent killer. There are often no symptoms and there is regularly no warning. At least 12 young people under the age of 35 die unexpectedly every week of the year from a heart condition that they did not know they had. I and various campaign organisations involved in tackling this issue believe that the number may be even higher. Perhaps even as many as 20 young people a week are lost by their families. Some 80% of those deaths occur with absolutely no prior symptoms.
Sudden cardiac death is thought to be caused by a heart condition, and young sudden adult death syndrome occurs when a cardiac pathologist is unable to find a definite cause of death. Thankfully, coroners are becoming more willing to name sudden arrhythmic death syndrome as the cause of death, which is a positive step forward, but we must continue to push for greater awareness.
My constituents, Graham and Anne Hunter, lost their beautiful daughter, Claire, two years ago from sudden cardiac arrest. Claire was only 22 and was newly married to Andy. She was a trained accountant and a mature, beautiful girl with an exciting life ahead of her. She had no prior symptoms. She was in a spa on a hen weekend, relaxing with friends in a jacuzzi after a swim. She said that she felt hot and sick, and she sadly died from sudden cardiac arrest. It took a significant time for the ambulance to arrive. We and her family do not know whether, had the spa had a defibrillator, that would have saved her life.
Claire’s family have since been screened. Heart conditions have been found and preventive measures put in place by the excellent Southampton general hospital. Graham and Anne’s lovely daughter Claire was cruelly and tragically taken from them, and that terrible loss exemplifies what is happening to other families in every community and constituency each week. Graham and Anne are sitting in the Public Gallery listening to and watching this vital debate, and I pay tribute to them and to many other families across the country who have lost their precious children to such a cruel and sudden tragedy. Such losses are often preventable, which only makes them even more heart-breaking.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I congratulate the hon. Lady on securing this important debate. Does she agree that this tragic condition seems to hit fit young people, such as my constituent Mr Philip Evans who was a family friend? He was a keen bodybuilder and he tragically died from this condition.
Mims Davies
I agree with the hon. Gentleman. We are losing fit, young, capable, able and good people, and we must do something about it. We bring our children into the world. We school and train them, and above all we love them and get them ready for a future—our future. Economically, there is a case to do something, but the emotional case is priceless.
Screening has been proven to work. In Italy, screening is mandatory for all young people who are engaged in sport, and cases of young sudden cardiac death have fallen by 90%. In this country, free screening is provided only when a young death has occurred in the family, or through the work of Cardiac Risk in the Young and the help of affected families who fundraise for that cause.
Pauline Latham (Mid Derbyshire) (Con)
I congratulate my hon. Friend on securing this important debate. My constituent, Sam Wright, who was a very fit young man, died suddenly. His friend, Danielle West, has fundraised on behalf of CRY and secured enough money to screen all the sixth-formers at the school that Sam used to go to. Three of those sixth-formers have had further tests. I do not know the results of those tests, but three people who knew nothing may have a condition that can now be treated. My hon. Friend’s campaign is valuable and we should continue with it.
Mims Davies
I absolutely agree. The UK National Screening Committee has refused to make a comprehensive offer of heart screening for young people in the UK, which I think is a scandal.
Mike Gapes (Ilford South) (Lab/Co-op)
I lost my own daughter three and a half years ago from sudden unexplained heart failure. I am a supporter of CRY, and I appeal to the Government to listen to what is being said in this debate. Many young people between 14 and 35 die suddenly from an unexplained cause, and that is a personal tragedy for the families and friends of those young people. I came to this debate unsure of whether I would be able to intervene, and it is a great grief and something that is with me all the time. I wish that people would take this issue more seriously.
Mims Davies
I thank the hon. Gentleman for such an eloquent and kind intervention. I am sorry for his loss. We think of all the children in this debate.
How can it be right to wait for tragedy to strike before taking action? That is truly unacceptable. I urge the Minister tonight to review the policy and to reverse it. As with many other preventable illnesses, screening needs to be part of the standard healthcare provided to our young people. Screening has more than just general benefits: it helps to prevent future diseases. Heart UK estimates that if 50% of people with the potential genetic condition known as familial hypercholesterolaemia or FH—a naturally occurring high cholesterol condition—were diagnosed and then treated, the NHS could save £1.7 million per year on treatment. Truly comprehensive heart screening is a good measure for now and a perfect insurance policy for the future.
Tom Tugendhat (Tonbridge and Malling) (Con)
I pay tribute to my hon. Friend for this fantastic opportunity to highlight a major national issue. I also pay tribute to the hon. Member for Ilford South (Mike Gapes) for his courage in intervening to talk about a clearly incredibly fraught moment, not only for him but for his whole family and all who share his grief.
In my constituency recently, a young man was playing football when he dropped dead. Junior Dian, who played for Tonbridge Angels, could have been saved by screening. We are pleased to say that the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) is working with the Premier League and other organisations to introduce screening for individuals across our country. I hope very much that we will all join her in urging sporting institutions, whether relating to football, rugby or cricket, to push for this opportunity to save young people. Sudden cardiac death hits every part of society. My very dear friend’s brother, the late Earl of Shaftsbury, died in his sleep, aged 30, in New York. This hits everyone: old, young, rich or poor. We can do better. We must do better.
Jim Shannon (Strangford) (DUP)
In Northern Ireland, we have done three things. First, schools have responded. I visited Regent House school just last week and there were 60 young people doing CPR testing—that was very positive. Secondly, we have first responders in Strangford, volunteers with a defibrillator. So far, they have had 64 call-outs in less than a year. Thirdly, the Henderson Group has purchased defibrillators for each of their shops in Northern Ireland. Those are three initiatives that can make a difference. I commend the hon. Lady for bringing this issue to the House.
Mims Davies
I thank the hon. Gentleman. I think that is something we can absolutely pick up on. There are other ways we can reduce mortality at any age, young or old. We need to have more ready access to defibrillators and further CPR training.
Dr Tania Mathias (Twickenham) (Con)
Does my hon. Friend agree that a teenager should not get a driving licence unless they have CPR training?
Mims Davies
I absolutely agree. That is a wonderful idea to make people aware, early on, about health intervention and what can be done through training.
Mrs Maria Miller (Basingstoke) (Con)
I thank my hon. Friend and Hampshire neighbour for giving way and I pay tribute to her for securing the debate. Will she join me in paying tribute to organisations such as my local parish council, which has gone out of its way to put its funds towards making defibrillators available not only in the local village hall but in the local village pub, too?
Mims Davies
Absolutely, and I thank my right hon. Friend. There is always a good reason to go the pub and that sounds like an excellent one.
Julian Knight (Solihull) (Con)
My hon. Friend is being very generous in giving way as I know this is a short debate. I pay tribute to her for securing the debate and for the passion she is showing in putting her case across.
On defibrillators, will my hon. Friend join me in congratulating Solihull Lions in my constituency, which has just paid for 10 defibrillators in public places, and the cardiac nurses at Solihull hospital who, touched by the tragic case of young Miles Reid, 21, who dropped dead of a heart attack while playing football, paid for a defibrillator in Shirley Park? Will she join me in congratulating those groups and in understanding the importance of public defibrillators?
Mims Davies
I absolutely do. My hon. Friend makes a great point about communities coming together—sadly, always off the back of a tragedy. We could be on the front foot on this issue instead.
Rebecca Pow (Taunton Deane) (Con)
I, too, absolutely commend this debate. Every single one of us probably knows somebody who has dropped dead. My brother-in-law’s brother, a great college friend of mine, did so, and we all know such people. We are, in particular, encouraging our young children to get into sport big time, and it gets more and more intense. Every time they get selected, they have more sessions, more training and it becomes more high profile; I would urge that we get testing going for these young people. It is often the fit and sporty ones that seem to be affected. Does my hon. Friend agree we should do something for these particular type of students?
Mims Davies
Absolutely. Italy saw a 90% reduction when sporting people were properly targeted.
Portable defibrillators will help people with no medical training; they can provide immediate, first-instance help to all patients following a cardiac arrest. Survival decreases by 23% per minute. The UK Resuscitation Council asks for an AED—automated external defibrillator—to be present in any location where medical treatment is further than five minutes away. Clearly, that means pushing on with installing these crucial bits of equipment in every public building, and encouraging more businesses to have them.
I thank the Chancellor for listening to Graham and Anne Hunter from my constituency and to the British Heart Foundation. Some £1 million has been pledged for defibrillators for community centres and to ensure that schools are delivering CPR training awareness. This is a welcome step, but more can be done.
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
In my family’s case, my father died very young when I was two years old. I have had to go to my GP to ask to be monitored, and no suggestion has been made that my children should also be monitored, even though my grandfather also died young of what is clearly a potential genetic disorder. Does my hon. Friend agree that the Minister should consider how we can develop this across the national health service, thus ensuring that families are protected?
Mims Davies
If I did not know better, I would think that my hon. Friend was reading my speech. Action is needed on GP awareness. When there is an incident of sudden adult death syndrome, the family can be screened for free to look for potential causes. This is often because the conditions require a live and still beating heart for diagnosis, although problems are also often discovered through a process of screening for genetic hereditary conditions in families. It is up to GPs to ensure that they advise family members to get screened in these instances. I want to see far greater awareness among our practitioners of the huge benefits from screening. It is absolutely critical to fight to prevent these young mortalities.
So what do we want? First, MPs, campaigners and families want free screening for every 14-year-old to be checked for the key risk factors. Whether via schools, sports clubs or the NHS, we can find a way. Last week, at Fleming Park in Eastleigh, two youngsters were screened by CRY and found to be in urgent need of follow-up. Another screening was organised in Claire’s memory and was funded by local donations.
Secondly, we want more public access to defibrillators, and new local community buildings should, through planning, have one placed in sight. That is easily done. Thirdly, we want higher awareness among our among our general practitioners that hearts need checking at any age.
In conclusion, up and down the country every week, at least 12 young people are dying from sudden cardiac arrest—over 600 young people a year, and we have heard tonight that many MPs have experienced at least one incident in their family or their community. On 14 October, the Daily Mail reported that a family from Stoke-on-Trent lost a daughter in 2006 and now a son aged 17, after swimming on a recent holiday in Turkey. Each and every incident is a tragedy. These causes of death are conditions that can be picked up by screening. I do not believe that a health Minister is often told that we can relatively cheaply and surely prevent the deaths of thousands of our young people by taking some very easy steps. This evening, on behalf of many families, I ask the Minister to do just that.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
I thank my hon. Friend the Member for Eastleigh (Mims Davies) and all the other Members who have contributed to the debate for raising what is—as has been more than amply demonstrated—a serious and important issue. We have heard from Members who have suffered tragic losses, and I myself have lost a friend in similar circumstances. I thank all Members for bringing their experiences to the Chamber to inform our debate. Obviously, our sympathies are with the families who have been affected.
I suspect that some elements of my speech will not satisfy my hon. Friend, but I want to try to identify the areas in which I think we are making some progress, and also those in which some of the real difficulties lie. Many of them involve clinical challenges rather than political decisions.
I join my hon. Friend in paying tribute to her constituents Graham and Anne Hunter, who have worked tirelessly to raise awareness of sudden adult death syndrome because of the personal tragedy that they suffered. My right hon. Friend the Secretary of State met them in June 2013, along with the UK National Screening Committee’s secretariat and Public Health England’s director of screening programmes, Dr Anne Mackie.
Sadly, as we know, not everyone survives cardiac arrest, and 100,000 people die of heart disease annually in the United Kingdom. As my hon. Friend said, an estimated 400 to 500 cardiac deaths each year are unexplained, and most have a genetic basis. In some cases there is no definite cause of death, even after the heart has been examined by an expert cardiac pathologist. Most sudden deaths in people under 30 are caused by inherited cardiomyopathies and arrhythmias. The situation is very tragic.
My hon. Friend mentioned three possible solutions. The principal one was population screening, but she also mentioned defibrillators, the provision of testing and advice for the families of those who suffer a sudden cardiac arrest, and GP awareness. I shall try to touch on all those points, although time is slightly against me: I have only about 10 minutes.
I think that if population screening were easy and obvious, we would do it, but it is not easy or obvious, despite the compelling reasons why we would all want to respond to the challenge. Let me try to explain why. As many Members will know, screening programmes in England are set up on the advice of the UK National Screening Committee, so these are not political decisions. They are decisions based on the best currently available evidence and expert advice from those who are most qualified to provide it, and many factors are weighed in the balance. The evidence is drawn from the United Kingdom and from other countries around the world.
Earlier this year, the UK NSC carefully considered the evidence in favour of introducing cardiac screening for people between the ages of 12 and 39. They took account of, for instance, the fact that sudden cardiac death covers a range of extremely complex conditions which are very difficult to detect by means of screening. Although it is such an important health problem, the committee found little peer-reviewed evidence that would have enabled it to make an accurate assessment of the number of people affected.
There is no single test that can detect all the conditions involved, nor is it possible to say which abnormalities will lead to sudden cardiac death. Moreover—this applies to other kinds of screening, but it applies particularly in this context—there is currently a risk that a false positive or a false negative could result. There is a clear risk that a positive result could be given to someone who was not affected by these conditions, and we can all imagine some of the effects that that might have. Someone might worry unnecessarily about having a heart problem, and might refrain from exercise that would be beneficial for their health, or give up a promising career in sport. A false negative would also present significant challenges. It is possible to have a heart problem that a test will not pick up. Fabrice Muamba, for example, had several screening tests throughout his career which did not identify any problems, but we saw his sudden collapse on the pitch at White Hart Lane.
Telling someone they have a condition when they do not could cause unnecessary anxiety to everyone concerned, even though it might not affect them. That causes difficulties, as does telling someone they are in the clear when they are not. These are the difficult elements of decision making and evidence that our expert committees have to sift in coming to a conclusion and making a recommendation. In the review that has just taken place, no studies reporting on test performance, sensitivity or specificity were identified by academic evidence. It was therefore felt that it was not possible to recommend the use of such a test in a national programme.
Another key test for screening is that once a problem has been detected, there must be something we can do about it, either by treating a condition or by helping someone to remain healthy. The conditions that lead to sudden cardiac death are poorly understood, and there is no evidence to guide clinicians as to what the treatment or lifestyle advice would be when a problem is found in a family member. That is not to say that in every circumstance people cannot give advice, but across a population-based screening programme it would not be possible to know what the advice would be for everyone screened. For some of the conditions implicated in sudden death there is no treatment. Delivering the message that someone has a condition is extremely difficult, but it is exacerbated where no known treatment is available. A person who tests positively will face significant dilemmas, and not just the ones I have touched on. Such dilemmas may involve ending a career they have mapped out for themselves or decisions about their family situation. They can also be penalised financially through higher insurance premiums.
On screening, the situation is extremely difficult. The evidence has been carefully weighed up recently, and we should introduce screening only when there is evidence that it can be effective. Overall, at this time, the UK NSC found insufficient evidence to support it. That position was supported by the British Cardiovascular Society, the national clinical director for heart disease in the NHS and the Royal College of Paediatrics and Child Health. They made that position clear in their responses to the public consultation. The difficulties were acknowledged even by Cardiac Risk in the Young, which, as many hon. Members have said, does wonderful work campaigning in this area. It acknowledged some of the concerns identified by the review, although I also accept that it took issue with some of the other matters raised in the conclusions.
This year’s decision by the UK NSC is not the end of the road in the consideration of screening for sudden cardiac death. The evidence is routinely reviewed every three years, but individuals and organisations can alert the committee at any time to any new peer-reviewed evidence published in the interval between regular reviews. It goes without saying that I will draw the committee’s attention to this excellent debate, how well supported it has been and the strength of feeling that has been expressed. Such a notification will be considered by the UK NSC, which can conduct an early update of a review in response.
Let me respond to the point that was made about Italy, because it has been raised before. My hon. Friend the Member for Eastleigh mentioned the example of Italy’s introduction of screening for all children involved in organised sport. Although there is literature on the screening of young people participating in sport, the evidence is again mixed, and some of the outcomes have been questioned. We are keen to understand what is going on in Italy, but it has yet to share its national data on the screening programme. The Secretary of State wrote to his Italian counterpart to request these data in August 2013, following the meeting that I mentioned earlier. This has been chased up on a number of occasions but the data have not been forthcoming, to date. Obviously, I will write again after this debate to say that we would like to see the data, because they might be one example of data that could inform a future NSC evidence review. My hon. Friend and other hon. Members may also be interested to know that the Sports Minister and I spoke today to some of the major sports governing bodies and raised this important issue. They are very much aware of their responsibilities towards young athletes, and we had a very productive discussion about what they have already done and what more they are considering in this area.
Let me touch a little on the research that is going on, because I have mentioned that we do not know much about some of these conditions and do not have treatments for some of them. The National Institute for Health Research is funding research on early detection of asymptomatic cardiomyopathies through its biomedical research centres and units, including the genetic aspects of the condition. It is also supporting a project with partners, including Manchester United football club, to identify the healthy limits and wider benefits of exercise for young elite athletes, normal healthy children and children with congenital heart defects. There is some really interesting and important work going on, and some of the data will be used to improve screening protocols for cardiac abnormalities in young athletes. The evidence from that research will be provided to the UK NSC when it next reviews the evidence, or earlier if new evidence comes to light.
Let me touch on defibrillators in the remaining three minutes. Tonight we have heard some wonderful examples of local campaigns across the country, and I pay tribute to all the people involved in ensuring that we accelerate access to defibrillators. In the March Budget my right hon. Friend the Chancellor of the Exchequer announced a £1 million fund to boost public provision of defibrillators in England and to support training in their use. That funding is now being administered by the British Heart Foundation.
Members of Parliament also have a role to play in that regard, for example if they think there are places where we need to have defibrillators. Many of them are in public buildings and sports grounds—I was discussing this with sports governing bodies only today—but they are of no use to wider communities when those buildings or grounds are closed. We can ask those questions on the back of debates such as this one, and I know that hon. Members are well placed to do that. The Hunter family, of course, have been extremely instrumental in making that change happen, and we pay tribute to them for that.
My hon. Friend also mentioned the importance of providing support to families of people who have suffered a sudden cardiac death and the need to ensure that GPs are aware of that. I make a commitment now to write to the Royal College of General Practitioners and draw its attention to the strength of feeling and the continuing concern that this might not be as well understood as it should be. When there is a sudden cardiac death, we need to take action to ensure that potentially affected family members are identified and offered counselling and testing to see if they, too, are at risk.
The national clinical director for heart disease, Professor Huon Gray, and representatives of NHS England, the Department of Health and the British Heart Foundation met the Chief Coroner in late 2013 to discuss that matter. Guidance has now been issued to the coronial system on how to deal with potentially affected family members. The Department will do all it can to encourage that, and I will write to the Royal College of General Practitioners to draw its attention to Members’ interest in spreading good practice in this regard. NHS England is committed to working with all stakeholders to ensure that we develop and spread good practice, particularly as evidence becomes available.
I will conclude by once again thanking my hon. Friend the Member for Eastleigh and all hon. Members who have attended the debate—I have responded to a great many Adjournment debates, and this is easily one of the best attended. That is clear evidence of the strength of feeling across the House on this important subject. We will continue to give it our utmost attention.