Autumn Statement

Debate between Baroness Lister of Burtersett and Lord Deighton

Wednesday 3rd December 2014 Lords Chamber

[Lord Deighton]

There were five questions there. First, I obviously accept the point that my noble friend makes about real wages, although wages exceeding inflation has been coming through only in the last year. He is absolutely right that the forecast from the OBR is that that will continue and that we will see earnings outstrip inflation, which would be a good thing.

Secondly, what is the story behind the spending cuts, which are quite significant? The simple story is that we plan to continue at the rate we have successfully implemented in this Parliament. We know that we can do it. In fact, we have managed to do it every year and still end up with an underspend. My right honourable friend the Minister for the Cabinet Office put out a paper this morning on how we will find another £10 billion of efficiency reforms on top of the nearly £15 billion that we have achieved in this Parliament. There will of course be a continuing review of welfare to ensure that we are focused on getting people back to work and that we are targeting those who really need to receive it. It represents a significant amount of our public expenditure, so that has to be part of the programme.

My noble friend asked whether we would effectively ring-fence the infrastructure investment. There is a commitment—effectively a fiscal rule—that we will retain public sector gross investment at a consistent level. If we stick to that, that is what will happen. Of course, the great success of all that we have accomplished is that so much of our infrastructure has been financed by the private sector, so it is not constrained by that measure anyway.

I think that postgraduate loans are a terrific initiative because not having money was becoming a constraint on people doing research. Therefore, that is a good thing on a number of grounds.

The multinational tax measure is looking at companies which put in place elaborate structures effectively to move their profits to offshore locations with a lower tax rate. The mechanism to capture that will dismantle those structures and look at the real profits, which we can then tax.

[Baroness Lister of Burtersett (Lab)]

My Lords, like earlier Autumn and Budget Statements since 2012, there is no reference in this Statement to the likely impact of the measures on child poverty levels, despite the legal duty to eliminate child poverty by 2020. Can the Minister therefore tell your Lordships’ House what the impact of the two-year freeze in benefits for working-age families will be on child poverty levels? Also, how did that freeze fare when set against the new family test, particularly taking into account the significant reduction in the real value of benefits for children under this Government?

[Lord Deighton]

The fundamental approach of this Government to addressing poverty is to get people back into work and to ensure that real earnings recover and outstrip inflation, as we discussed earlier. In looking at the distributional analysis to see who is contributing towards the benefits, the top 20% pay more than the remaining 80%, so that is how the balance of our distribution looks.