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
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.
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.
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.