Budget Resolutions

Jonathan Reynolds Excerpts

Thursday 7th March 2024 Commons Chamber

[Mel Stride]

My point clearly remains that growth is a function of both the size of the population and the level of productivity. As a consequence of all the elements that feed into growth, the OBR has confirmed that we will be growing a little faster at certain times than was anticipated at the time of the autumn statement, and our growth will compare favourably with countries such as Germany.

This debate is meant to be about making work pay, and the right hon. Member for Leeds West had very little —in fact, next to nothing—to say about that. [Interruption.] As she says from a sedentary position, she mentioned the national living wage—something the Conservative party is proud that it brought into being.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

indicated dissent.

[Mel Stride]

You are thinking of the national minimum wage. The national living wage was a Conservative decision —[Interruption.] You did, but it is a pleasure to correct you on this occasion—[Interruption.]

Budget Resolutions and Economic Situation

Jonathan Reynolds Excerpts

Thursday 16th March 2023 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Thank you, Madam Deputy Speaker, for calling me to close the Budget debate this evening. I begin by acknowledging all 28 speeches we have heard today, but I want to pay a particular tribute to my hon. Friend the Member for West Lancashire (Ashley Dalton) for her outstanding maiden speech. I thought she captured the history and pride of her constituents, but also their ambitions and aspirations, in a truly impressive way. I also want to refer to the fact that she is a graduate of the Jo Cox women in leadership scheme. For the shadow Chancellor and me—we were both asked to speak on the day Parliament was recalled following the loss of Jo—to be able to open and close this debate and see a graduate of that scheme take her place and give a maiden speech like that, of such quality, is truly one of the legacies that Jo deserves. I know the whole House will share that sentiment.

As we have heard, this Budget has come at a time of profound importance for the country. Many Members have said that too many of their constituents are not just struggling to afford the little things that make life worth living, but finding it a stretch to afford the basics. We see every public service squeezed to breaking point. Frankly, very little in this country is working as it should. At the same time, there is an urgent need to proceed with net zero, and win the prize of the jobs and industries that will sustain our economy for generations to come. Acknowledging these challenges is not talking Britain down; it is facing reality head-on.

Yet, after looking at those challenges, what was the Chancellor’s big idea yesterday? What was the rabbit out of the hat and the only thing we did not know was coming? It was that huge tax giveaway for thousands of the very highest earners, during a cost of living crisis. I think we have learned something in this debate today, because we have found out that the Government cannot even tell us how many doctors that will benefit. I do not think they are unwilling to tell us; I do not think they know. As my right hon. Friend the Member for East Ham (Sir Stephen Timms) said, they never seem to miss an opportunity to give something away to those at the top.

Most of all, we have had another Conservative Budget and another set of lost opportunities to rise to the challenges we face. Fundamentally, it is a Budget for growth that downgrades growth. Many Members have rightly highlighted that the cost of living crisis is dominating the lives of their constituents and the hard-working people who have seen their wages stall while prices have risen.

[Grahame Morris]

My hon. Friend is very kind to give way, and he is making an excellent speech, but can I just ask his opinion about left-behind areas? It is all very well for the high earners who are getting advantages with their pension pots, but does he see the benefits, particularly in former mining communities, of implementing the recommendation of the Business, Energy and Industrial Strategy Committee report and returning the investment fund and the full miners’ pension scheme surplus to retired miners and their widows, who are struggling with the cost of living crisis, not least with huge fuel bills?

[Jonathan Reynolds]

I am grateful to my hon. Friend for his question. He will know that he represents several members of my family, so I have personal knowledge of his constituency, and they think he is a very fine Member of Parliament. Because of my family and my personal heritage of growing up in County Durham and mining communities, I know the issues he talks about, particularly those around profit sharing and the surplus and reserves of the mineworkers’ pension scheme. There is a case to look at there, and I would be more than happy to engage with him on those issues for the benefit of his constituents and those of other Members in the Chamber.

We are seeing people cutting back on all they can, but still being left with too much month at the end of their money. The British public need only ask the following questions. Are they better off after 13 years of this Government? Are they safer? Are the public services they rely on working better than a decade ago? No, no, and no again. At the core of that failure is the hard truth that, over 13 years, the Government have turned the UK into the worst-performing major economy in the world. That failure is at the heart of what is hitting people’s pay packets and public services. As we have heard many times in the debate, the British economy is the only developed economy in the world that has still not recovered to its pre-pandemic size.

[Catherine West]

My hon. Friend is making an excellent speech. Does he agree that without reforming housing—be it the overly pricey private sector, the lack of social homes or the mortgage crisis created by the last Budget—there can be no real growth?

[Jonathan Reynolds]

I am grateful to my hon. Friend for raising those points, because housing is another area that we heard very little about in the Budget yesterday. Perhaps that was because of the mortgage premium that many people in this country are paying as a result of the last Conservative mini-Budget, if we are still able to call it that—the impact certainly was not mini. My hon. Friend makes some very good points about what that means for her constituents.

We have seen the lowest business investment of any G7 nation, and wages are at the same level as they were in 2008. I spend pretty much all my time talking to businesses, and I often genuinely find myself thinking, “With all the brilliant things in this country, how have this Government managed to do so badly?” The big story of the Budget is the same as ever: low growth, high taxes and poor public services. To truly realise the ambition of this country, we have to change course from that. Half measures on childcare, which will take years to come to fruition and just pile more costs on to providers and parents, will not cut it. Saying we want to be a science superpower or a leader on clean energy is not the same as delivering the measures to actually do it, and spending millions of pounds on a handful of very wealthy people getting even bigger pensions will not drive the kind of dynamic labour market we need. The big, bold and radical ambition for this country will come only from a Labour Government.

Crucially, the Budget comes at a time when we can no longer put off the major decisions on net zero, because our competitors are pulling ahead. The Inflation Reduction Act in the United States and the Net-Zero Industry Act in the EU have radically affected the relative competitiveness of the UK, which is a point that my hon. Friend the Member for Stockton North (Alex Cunningham) made particularly well. When it comes to climate change and the chance to reindustrialise parts of Britain, we are presented with the fierce urgency of now.

This year, we have already had bad news from Ford, which is cutting jobs in Essex. We have had bad news from British Steel, which is cutting jobs in Scunthorpe. We have had bad news from AstraZeneca, which has chosen Ireland over Cheshire. This is the challenge that I wanted the Budget to rise to, because I want to see the Government put up a fight for Britain. After 13 years, I am sick of austerity, poor public services and stagnation. If, like us, people want hope, optimism and change, it should be clear by now that it will not come from doing more of the same.

We all know that the Government have a poor record on crime, but perhaps even we did not expect them to be so brazen as to commit an act of burglary themselves by taking so many of Labour’s ideas for the Budget. Indeed, we have heard many speeches today extol the benefits of childcare reform, keeping the energy price freeze and ending the injustice of prepayment meters. I say to Ministers that they are very welcome, as we are more than happy to share our ideas with a Government who have seemingly run out of their own. But rather than have the half-fat versions of our plans, why not go the whole way and bring the fundamental change that this country needs with a full Labour Government?

At the top of that list is that Labour believes that this country needs an industrial strategy, one that is not about picking winners; an industrial strategy means having a plan to keep Britain competitive in the global race. This Government have a curious mix of big state, top-down targets and a kind of total libertarianism in how to deliver them. For example, it is Government policy to force residential and commercial property to meet higher standards in just four years’ time or be removed from the market; to decarbonise home heating; and to phase out petrol and diesel vehicle sales in just seven years’ time. But the Government are not on track to meet any of those targets because there is no plan to deliver any of them. Just to retain our existing automotive industry we will need 10 battery gigafactories, but we have one. Germany has 10 times that capacity, and every day we fall further behind, more jobs and industries go elsewhere.

Only private investment and public investment pulling in the same direction can deliver the wall of money we need to renew this country. We accept that we cannot possibly equal the awesome fiscal firepower of the United States, but we can make the UK more competitive, we can target funding where it will make a difference and we can make markets deliver what we need. Let us consider a sector such as steel. We know that we must make the transition to green steel or face the likely end of the UK steel industry. Governments from across the world—Sweden, Austria, Canada, Germany—are partnering with their steel sectors to go green. We know that there is market demand for that here in the UK, but we have not got a Government willing to be the partner that industry needs. So Labour’s industrial strategy will work in partnership with industry to keep Britain competitive, not with random pots of money with no return to the taxpayer or endless changes to the corporation tax and investment regime, but with a long-term plan to make Britain investible again.

Labour also believes in a fundamentally different approach to our economy and our politics. We know what every good business leader knows: sustained growth comes from working people, and they are our biggest asset. So where is the employment Bill the Government pledged? Where is the promise, 12 months on, that there will be no more P&O Ferries ever tolerated again in the UK? Basic rights, such as sick pay, holiday pay and protection against unfair dismissal, should be for everyone. That is why we in the Labour party will always be the party of good work and good wages, and where this Government have failed to act, we will act, with our new deal for working people to do just that.

I did welcome one part of the Budget: the trailblazer announcements on devolution to my area in Greater Manchester and to the west midlands. We believe that the country is too centralised, and too often that leads to poor public services and the inefficient use of public money. But why should only two parts of England get the chance to shake themselves free from the dead hand of this Conservative Government? Why can the remaining 90% of the country not have that option too? That is why we will give every community the power it needs to shape its own destiny.

For all the talk of going for growth, at the core of this Budget is the same old Conservative malaise: the lack of ambition and vision that has turned us back into the sick man of Europe. I have sat through 13 years of Conservative Budgets, and as the years go on their claims get thinner and thinner. Last year, when inflation was rising, it was all down to global forces, but this year when it has peaked and it is set to fall, all of a sudden that is down to Conservative genius. Frankly, the British people are not fooled.

Listening to Government Members today, it seems they want to congratulate themselves on a job well done because a Conservative Chancellor got to his feet and this time has not crashed the markets, because we narrowly and technically avoided a recession, and because the growth forecasts are bad but not quite as bad in the short term as last time. Is that what the Conservatives have come to? Is that the measure of success? Have we set a bar so low that we will trip over it as we leave the Chamber today? People are paying more than £1,000 more on their mortgages right now because of recent Conservative actions. Investment and jobs are leaving our shores because of those actions. Our constituents are stuck on waiting lists because of those actions. The lack of action on tackling that is unforgivable.

We believe that Labour has the ambition to match Britain’s potential. We will take this country from the bottom of the G7 to the top. We will have the highest sustained growth of our competitor countries and deliver the public services that people can rely on. We will deliver more doctors and nurses to get waiting lists down; police officers back on the streets; higher wages and better jobs in industries that people will be proud to work in; and a plan to reindustrialise Britain, to give back our hope and our future. That is why it is clear that only a Labour Chancellor can deliver the change that our country so desperately needs.

Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill

Jonathan Reynolds Excerpts

2nd reading
Friday 26th November 2021 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I congratulate the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) on presenting this Bill. As the public probably know, Members have huge discretion in respect of what legislation to choose when they are successful in the private Members’ ballot, and I think everyone here today is personally very grateful to the hon. Lady for using her success in the ballot to propose these measures.

We face significant challenges in the world of pensions, whether they relate to the viability of schemes, the future of auto-enrolment—which was mentioned by the hon. Member for North West Durham (Mr Holden)—the threat posed by scams or the recent growth in pensioner poverty, which is a worrying trend. However, while we invest our efforts to confront those challenges, it is only right that, when possible, we seek to take the relatively more straightforward steps that will help us to correct problems in the pensions sector, and work with the pensions industry to deliver the best possible outcomes for our constituents. That is why, I am happy to say, we support the Bill in principle.

This is a sensible Bill, designed to streamline and clarify legislation on converting guaranteed minimum pensions in order to equalise benefits between men and women in accordance with the Equalities Act 2010 and following the High Court judgment relating to the Lloyds Banking Group schemes in 2018. The hon. Member for Rutherglen and Hamilton West made a very good speech outlining that case: it might sound technical to some, but I think that she explained it very clearly.

I know from my conversations with representatives of the sector that converting GMPs into other scheme benefits on a value basis like this is the preferred way of addressing equalisation, rather than the costly and often complex dual-records approaches. However, we recognise that there are problems that have remained unresolved since GMP conversion was first in legislation. As the hon. Member for Rutherglen and Hamilton West explained, they relate to the lack of clarity on whether the legislation applies to survivors as well as earners, and the lack of provision for circumstances in which the scheme’s sponsoring employer no longer exists and is unable to consent to the conversion exercise. Her Bill addresses those problems in a simple and practical manner, and I have noted the support that it has received from the pensions industry. The head of GMP equalisation at Lane Clark & Peacock—a friend of many of us—has said that it will

“make the whole process of equalising benefits using GMP conversion easier.”

The last Labour Government made clear their belief that we needed to equalise GMPs, and the Bill is an important step towards ensuring that everyone enjoys dignity and security in retirement. We should be doing everything possible to help the pensions industry to fulfil what are now its legal duties to deliver GMP equalisation, and that includes supporting the Bill. I see no reason why Members in any part of the House would not wish to see these flaws addressed, and I sincerely hope that the Bill is able to proceed to its Committee stage. I repeat our support for it, and commend the hon. Member for Rutherglen and Hamilton West for choosing to introduce it today.

Social Security (Up-rating of Benefits) Bill

Jonathan Reynolds Excerpts

Consideration of Lords amendments
Monday 15th November 2021 Commons Chamber

[Guy Opperman]

I will make some progress.

It is right that I address these Lords amendments, Madam Deputy Speaker, because, as you rightly outlined, they engage financial privilege in that they interfere with the financial arrangements made by the elected House of Commons. That alone, I respectfully submit, is sufficient reason to disagree with the Lords amendments. However, it is also right that I address directly the point that was made by the House of Lords that invites the Secretary of State to measure earnings as if they were not actually growing by 8.3%. I assure the House that there is no robust way of calculating them as if they were not.

The independent Office for National Statistics has responsibility for producing economic statistics to the highest possible standards. ONS experts investigated whether it was possible to produce a single robust figure for underlying earnings growth that stripped out impacts from the pandemic, and concluded that it was not possible. Alongside the actual earnings growth figures, the ONS suggested a possible indicative range of 3.6% to 5.1%. These figures do not have national statistics status. Indeed, the ONS itself includes heavy caveats on the issue and advises caution in approaching it. The Bank of England also cast doubt on identifying a figure that could be relied on. The ONS said:

“There are a number of ways you can try to strip out these base effects, but no single method everyone would agree on. We have tried a couple of simple approaches…Neither approach is perfect…Our calculations of an underlying rate are there to help users understand base and compositional effects, but…there remains a lot of uncertainty about how best to control for these effects.”

It said that the statistics therefore “need to be” treated “with caution”.

We believe it would be reckless in procedure and in law for this or any other Government to set a precedent for uprating benefits or pensions using a methodology that is not robust and for which there is no consensus. That is why the Government have decided to suspend the earnings link in this year of exceptional and anomalous earnings growth. Instead, we decided to apply a double lock underpinned by the established consumer prices index published and approved by the ONS. This approach was also recommended by the Social Market Foundation and other commentators, and very strongly by this House on Second Reading, Report and Third Reading. That is the legislation that this House passed to the Lords, and that is the legislation I would urge this House to send back to the Lords.

I remind the House that over the two years of the pandemic the Government will have ensured that the pensions covered by this Bill will have increased by much more than prices, by reason of the 2.5% increase last year and the link to CPI this year. In those circumstances, I commend this House to reject the House of Lords amendments and agree that we proceed with this one-year Bill by reason of the pandemic.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Whatever else could be said about the House of Lords, it is a place that genuinely contains a great deal of expertise on the subject of pensions. We are fortunate to have that expertise in Parliament and we should be prepared to listen to it. Having studied the exchanges in the Lords, I feel that the Government’s positions on this matter have not held up well under scrutiny, and the debate has moved on considerably since we last discussed it here.

Labour will therefore vote to accept the amendment put forward by the former Conservative Pensions Minister Baroness Altmann, which was well argued and handsomely carried, but which also most closely reflects our own position on these matters. That is to say, we accept, as I have said clearly and repeatedly, the Government’s case that the true figure of earnings growth in the UK is not 8.3%. It would be absurd to maintain that that is what is happening to our constituents’ wages right now. Labour supports the triple lock. We believe the Government’s manifesto commitment should be binding and that the connection to earnings in the uprating decision for this year should remain.

In her remarks, Baroness Altmann made it clear that she was not proposing a specific uprating figure by proposing this amendment. That is important. It seems to me that all Conservative MPs could vote for this amendment, honour their own manifesto commitment, and still address the problem of how the pandemic has distorted the earnings data. It would just require the Government to effectively make an assessment of whether real wage growth is higher or lower than CPI inflation, and, if higher, use that figure.

When we last held a debate on this in the Commons, the Government said that that would not be legally sound, but the Lords debate knocked that down fairly easily. As Baroness Altmann said, for a judicial review to occur, the figure the Government used would have to be found to have been brought about by the Government acting irrationally. That is something we can never rule out with this Government, but it should be more than possible to avoid that. If I may say so, one of the reasons the Government lost this vote so badly in the Lords was their tendency to rely on short-term, inconsistent arguments to bounce from one day’s headlines to another’s.

[Guy Opperman]

The hon. Gentleman criticises the Government for not coming up with a solution, when he is unable in any way to come up with a solution or figure himself, as are the Office for National Statistics, the Bank of England and all other reputable organisations. In fact, the House of Lords did not come up with a figure, so what, pray, if he would enlighten the House, is the precise figure that he would see pensions increase by?

[Jonathan Reynolds]

I am grateful for the Minister’s intervention. I am about to explain why he has got himself and the Government into this position.

[Guy Opperman]

What figure?

[Jonathan Reynolds]

With respect, the Minister just needs to listen to this point. He stands at the Dispatch Box and, like all Ministers, tells us that black is white. For instance, when the Government reacted to the crisis of their own making—when we saw the pumps run dry and the shelves go sparse—they claimed to the country that this was a secret masterplan towards a high-wage economy that they had had all along. Now, we are having to see the Minister and the Government tie themselves in knots again, because he has been sent here to make the case, which we have heard him put very well, that the figure is too distorted and therefore we need this primary legislation, yet—and this is the problem, Minister—according to the Prime Minister, wages are up, workers have never had it so good and that is why the Government can cut £20 a week from universal credit. They are making two completely opposing arguments. We do not even know whether the Government believe that wages are rising faster than inflation. I politely say to the Minister that they cannot expect to have it both ways.

I will repeat a number of points that colleagues may have heard me say before, but I feel they need to be repeated in light of some of the media comments on the Bill. The uprating of the state pension is relevant to millions of pensioners in this country, but it is wrong to present it as an issue of intergenerational unfairness. That is because these decisions are also fundamentally about how we ensure that the state pension is indexed and retains real value for people who are in work today when they come to retire. This Government have been grossly unfair on people of working age, but frankly that is due to the burden of taxes they have inflicted on workers, rather than through the operation of policies such as the triple lock.

I hope the Minister took on board the comments made about pensioner poverty in this House and the other place. The Government’s use of what they call absolute poverty, which in reality is a measure of poverty relative to a fixed line in 2010, is unsatisfactory because not only does it ignore the statistical evidence, which is that pensioner poverty is now rising after it fell considerably under Labour, it also limits a serious debate on the drivers of that rise. The big picture is that the OBR predicts that as a country we will be spending an extra £6 billion a year, year-on-year, on pension-age benefits every year up until 2024-25. That is the year that the forecasts in the welfare trends report go up to, so it will likely continue to rise after that. Pensioner poverty is going up as spending rises substantially. We should be having a much more substantive debate about that, looking at housing costs, energy prices, food and access to good financial and investment advice. The way in which the Government present their own progress means that any real wage growth over the last decade allows them to claim that poverty has declined, so when the Minister says that 200,000 pensioners have been lifted out of poverty since 2010, the reality is that that is a very poor level of performance compared with all previous Governments. Poverty is always relative, because it is a measure of whether someone has the means to live a fulfilling life in the society of which they are a member. That is not just a left-of-centre viewpoint, but one that until recently was accepted by Conservatives, too.

However, to return to the matter at hand, the House of Lords has sent us an amendment that should genuinely command the support of the whole House. It requires the Government to maintain the earnings link in their manifesto promise, while still making allowance for the pandemic. This Government have dragged politics through the gutter in recent weeks, with stories of sleaze, corruption, contracts for donors and second jobs from Caribbean islands. I could go on, but the point is that public trust in this place matters. When the Government muddy our democracy in the way that they have, they cannot then turn to the public and ask voters to simply take them at their word. For public trust to return, the first step has to be for the Government to keep their promises. Today, Labour will therefore support the amendment that would allow the Government to keep their promise on the pensions triple lock.

The Lords have sent us a very reasonable set of measures, and frankly I see no logical reason not to support them if we want to protect the link between earnings and pensions. If the Government are unable to do so, they should admit what is really going on: they are using the pandemic as a smokescreen to scrap the triple lock and pocket the savings. They should cut the obfuscation, keep their promises and vote for the Lords amendments.

[Duncan Baker (North Norfolk) (Con)]

As the MP for North Norfolk, which has some of the highest numbers of older people in the country, you can understand, Madam Deputy Speaker, why I want to speak briefly in this debate. First, we have come back to basics. I was a finance director and a chartered accountant before I came into this place, so I have a reasonable grasp of statistics, and it is fair to say that this Government have, to the tune of around £400 billion, safeguarded the country through a pandemic that no one ever expected. Not only that, but the national debt sits at some £2.2 trillion, so it is understandable that we are sitting here this evening being extremely careful and prudent about what we do with our public finances.

The electorate, as we have seen many times before, will forgive a Government many things, but they will not forgive a Government being reckless with the public finances. We have to understand that, much as we would like to increase pensioners’ pay, every 1% increase costs the Exchequer a billion pounds. To put that in perspective, with an increase of some 8% to 9%, we are looking at an increase of some £8 billion to £9 billion. I can therefore see entirely how that would sit when we have to look in the eye of a prison officer, a police officer, a teacher, a firefighter or any other public sector worker who has seen their pay frozen for the past year. That is the real context. It is about fairness and a statistical anomaly caused by the dip, coming off furlough on to 100% pay and when the ONS statistics were taken. It has given rise to this one-off statistical anomaly.

What the House of Lords has proposed is sensible, and I took that to the Secretary of State to ask whether we could do something to still honour the framework of the triple lock, while ensuring that we have a sensible parameter to measure it by. The answer that came back was exactly the same as the one the excellent Minister just gave: we need a robust metric. We cannot just move the goalposts and cherry-pick a point in time because the argument does not fit at the moment. Many of my constituents have written to me about this issue, and when a detailed reply has gone back to them, a great number understand why we have this one-off double lock.

In summing up, I say two things to the Minister. First, woe betide us if we do not honour the triple lock next year. We have some of the best public finances recovery in the G7, as the Chancellor said the other week, so we must get back to giving our pensioners the pay increases they absolutely deserve, because they have paid in all their lives. Secondly, it would be wonderful to go into the next election with the resounding message that our pensions are good, honest pensions that people have earned all their lives, at a level that people can be proud of compared with Europe. Too often, our pensioners feel that is not necessarily the case. I would like the Minister to ensure that we put our pensioners at the front of the queue as we come out of this pandemic. I wholly understand what he has said this evening. I will be rejecting the Lords amendment, because it is sensible to maintain the public purse in the best possible way at a time like this, so that our country can rebound from where we are at the moment.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Monday 8th November 2021 Commons Chamber

[Dr Coffey]

The hon. Member just shows her effectiveness as a Member of Parliament in responding to her constituent and taking the issue up with us. If there are specific details that she would like to go into, I think the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), will be more than happy to respond. It is right to say that universal credit is not paid to people who are of pension age, but I flag to her some of the issues addressed by my hon. Friend earlier when considering the backlog in paying out pensions.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

May I add my welcome to the new Ministers on the Front Bench today?

In the year before the pandemic, 380,000 sanctions were handed out by the DWP to the British people. Of course, there must be rules in any system, but since the Conservatives came to power in 2010, there has been a heavy focus on punitive sanctions, often for minor infractions, yet when the Home Secretary breaks the ministerial code by bullying, she gets off scot-free; when the Electoral Commission tries to investigate the Prime Minister’s flat refurbishment, it gets its wings clipped; and last week, when Mr Owen Paterson broke the rules on paid advocacy, this Government tried to do away with the rules all together. These are not one-offs. This is a pattern of behaviour. Does the Secretary of State appreciate that many people are comparing how the DWP operates with how the Conservative party behaves, and are asking, “Why is there one rule for the Government and another for everybody else?”?

[Dr Coffey]

Well, what can I say? The interests of the British public are best served when the Conservative party is in power and in government. We are seeing a rise in employment. We are seeing a universal credit benefit system that is more generous than the legacy system that was there. We are finally removing a lot of the thresholds that actually prevented people from working more than 16 hours per week. I am proud of not only our policies but our civil servants in delivering an excellent record in trying to make sure that money gets to the people who deserve it the most.

[Jonathan Reynolds]

People simply want to know that everyone in this country is playing by the same rules, and I think that is reasonable.

Let me turn to another crisis of the Government’s own making—the problems in the labour market we have seen over the past few months that left the pumps dry and the shelves sparse. As we left the single market it was obvious which sectors would be most disrupted: transport, logistics, and social care and the NHS. Regardless of how people voted, we have to make this work, which it clearly does not at the moment because of Government incompetence. This Government often claim they have a plan for jobs, but surely any credible plan would have tackled these shortages head on and got unemployed people the skills the economy needs to keep Britain moving. So, very simply, why was there no plan in place to prevent these problems?

[Dr Coffey]

Very evidently, the plan for jobs is working. We are seeing more people on the payrolls than was happening pre-pandemic. I hear what the hon. Gentleman says about some of the skills that may be required. I am conscious that many people who campaigned vigorously to stay in the European Union are still trying to use the excuse of leaving the European Union for why certain sectors are still under-supplied. The reality is that nearly 6 million people registered for the EU settlement scheme and they have an entitlement to live in this country if they so wish. I think there are some aspects of covid that are perhaps hindering people in coming back into the UK who are considering a return to their native countries. Let me say very clearly that we are working on this right across Government. We have the Prime Minister’s lifetime skills guarantee. We are encouraging people to consider swapping sectors, as is happening with aspects such as SWAPs—sector-based work academy programmes—for people who are unemployed. There are also the bootcamps for skills and the incentives to take on apprentices that have given been to employers right across the country. I can honestly assure the hon. Gentleman that the plan for jobs is certainly working.

Social Security (Up-rating of Benefits) Bill

Jonathan Reynolds Excerpts

2nd reading
Monday 20th September 2021 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Thank you, Madam Deputy Speaker, for calling me to close the Bill’s Second Reading for the Opposition. We have heard many good speeches, but, before I turn to them, I want first to deal with the central case that the Government have made for the legislation.

As my hon. Friend the Member for Reading East (Matt Rodda) set out in opening for Labour, Opposition Members accept that there has been an anomaly in the earnings data due to the pandemic, and we recognise that a solution is required. I have listened carefully to passionate speeches from colleagues across the House, but I simply do not believe that anyone in the UK believes that wages are rising at 8.3% in real terms across the board. If I were to put that case to my constituents, I think they would very much question my judgment. However, as we said since the announcement was made, the duty is on the Government to explain why their preferred solution—a move to uprating by inflation or 2.5%—is the right one. That duty is particularly important because the triple lock was a Conservative manifesto commitment and, as many hon. Members pointed out, the announcement to break it has come after a series of decisions to break other Conservative manifesto commitments. It is therefore reasonable that the burden of proof lies on the Government and that the threshold for support should be high.

We have had some valuable contributions. The hon. Member for Glasgow East (David Linden) was right to highlight the trust in the Government stemming from the decisions of the last few months. He was also right to point out figures that show that the number of pensioners living in poverty taken by the measurement that he indicated—those living with an income below 60% of the median after their housing costs—is rising. Given that we know overall spending on pensions is going up every year by quite considerable numbers, why are we also seeing that rise in poverty? That is a question for us all and one on which we may need more time in future.

The hon. Member favours auto-enrolment, and I very much agree. The question is about how to do that in a post-pandemic environment. He will understand, however, that I cannot agree when he posits that Scottish independence might be the solution to some of those problems, because an independent Scotland would clearly face some difficult economic decisions in its own right. I do not think it is necessarily helpful to put that across.

[David Linden]

Yes, an independent Scotland would face difficult economic decisions, but does the hon. Member accept that the central point of independence is about people in Scotland—the people who live and work there—making those economic decisions?

--- Later in debate ---

[Jonathan Reynolds]

I understand the basis of any nationalist claim for any sense of self-determination, but—this debate may be taking us a little away from the pensions uprating discussion, Madam Deputy Speaker—we all live on these islands together and, when we look at difficult economic decisions, the strength that we have by being a Union is of benefit to us all. [Interruption.] I will come to the speech by the hon. Member for North Ayrshire and Arran (Patricia Gibson), but I do not think there is time for a debate on Scottish independence as part of our discussion of pension upratings.

The hon. Member for Runnymede and Weybridge (Dr Spencer) made a brave case that the Government might actually lose trust if they held to their manifesto commitments, and I admired the style in which he did it. He wanted a wider debate on the earnings lock, but I would respectfully have to disagree with him on that. I do believe there is a need to maintain the value of the state pension and the objectives of the triple lock are ones we should keep to—many of the reforms in Parliament since I have been here have been based on a provision for the triple lock to take place—but I did appreciate his speech.

The hon. Member for Amber Valley (Nigel Mills) made, as ever, a thoughtful contribution. He questioned the ability—my hon. Friend the Member for Reading East raised this in his opening remarks—to analyse the underlying wage trend taking away the impact of the pandemic. The hon. Member for Amber Valley will know that that has been an open question, and several organisations have tried to do a piece of work on it. Ultimately, I do agree that it is challenging to do so in a way that is unchallengeable, and that is a fair point to make when looking at possible alternatives.

My right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Select Committee, pointed out that pensioner poverty is rising, as the hon. Member for Glasgow East did, and I think that has to be central to our discussions. My right hon. Friend the Member for East Ham made the point repeatedly that the question must be how we can increase the take-up of pension credit. He has raised this point consistently, and I know there has been some engagement with the Government Front Bench on it, but I think there is strong support for his words from all sides whenever he raises it. Of course, I believe he was absolutely right to raise the juxtaposition of the decision today with the cut to universal credit, and I believe the case is getting stronger every single day not to proceed with the Government’s cut.

The hon. Member for Wantage (David Johnston) raised pension upratings in the past. He will not, I think, mind my saying that if we look at the position say in 1997, when the Labour Government came to power, we see that a third of all pensioners back then lived in poverty. There was a very strong correlation in those days between growing old and being in poverty, and that was reduced to record low levels by the end of that Labour Government, so the record has to be considered in the round. However, I do agree with him, and I have said this myself, that I reject discussion of pension uprating as an issue of intergenerational conflict. I think it is very much about the value of the state pension when today’s workers do retire, and we should never forget that.

The hon. Member for North Ayrshire and Arran also highlighted the lack of trust stemming from recent Government decisions to break successive manifesto commitments. She obviously strongly opposes this measure. I think what is required is more engagement with the issue of whether the data we have before us is a true and accurate reflection of what we believe is happening in our constituencies. I have said very clearly to her that I do not believe that level of wage growth is the real picture, certainly in a constituency such as mine. Where I do agree with her is that coming, as this decision has, after other manifesto commitments have been broken, that is the context in which our constituents will look at what is happening.

My hon. Friend the Member for Birkenhead (Mick Whitley) also reflected on the run of broken promises and how this has come across to the public. He is absolutely right on pensioner poverty and absolutely right to demand transparency from the Government on this decision and commitments to reassure his constituents.

The hon. Member for Paisley and Renfrewshire North (Gavin Newlands) raised the cost of living, and I think that case is getting stronger every day. Again, we will not dwell on it, but I do not believe his analysis of independence as the answer to that is the right way forward.

The hon. Member for Strangford (Jim Shannon) was not convinced of the Government’s case either. He was also right to raise particular issues in Northern Ireland about the post-Brexit trading situation and the impact on his people as a result—something about which I think all the House shares concerns. Of course, he is again absolutely right about the impact of the universal credit cut.

However, there is no doubt that the most valuable contribution and perhaps the one of most interest was from the former Secretary of State for Work and Pensions the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith). Again, we have heard in the debate, and it is something I have said myself, that the triple lock is not a straightforward question of an intergenerational clash, and I know some people have concerns about linking the two issues together. However, I do believe he was right to raise—and to attempt to have his own amendment on—the impact of that universal credit cut, which we discussed in depth last week. I believe that the case against it gets stronger with every single day, and I would appeal to noble Lords in the other place to give this matter the due consideration that has not quite been possible today, but is still very valid.

On the reasoned amendment moved by the hon. Member for North East Fife (Wendy Chamberlain), this is an opportunity to discuss the wider context in which this decision has been taken and it makes reference to the universal credit cut that is imminent. However, while the amendment makes passing reference to that, its main argument is that there has been no anomaly, which is not the position of the Labour Front Bench. I can tell the House that I have had my own discussions with the Office for National Statistics, and I am very satisfied that the case for the 8.3% figure is, frankly, unsound.

I know there is an argument for simply insisting on a rise of 8.3%, but I do not believe that that is a responsible course of action. We make the case for the Government to change course on the universal credit cut, but that is because the Government can do so, it is the right decision and it is very much in the national interest, but I do not think, frankly, that the same factors apply to the decision before us today. Again, it goes back to whether we ultimately believe that that is the correct rate of wage growth or earnings growth across the economy as a whole.

For that reason, I will not be supporting the reasoned amendment, and I do not see much merit in dividing the House on Second Reading. However, we will be seeking to interrogate the Minister during future stages of the Bill, and we will be looking for the reassurances and that transparency we have sought since the original decision and announcement were made. Therefore, we look forward to the remaining stages of the Bill.

Universal Credit and Working Tax Credits

Jonathan Reynolds Excerpts

Wednesday 15th September 2021 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I beg to move,

That this House calls on the Government to cancel its planned cut to Universal Credit and Working Tax Credit which from the end of September 2021 will reduce support for many hard-working families by £1,040 a year.

I reiterate what I said when we had this debate in January: while, understandably, strength of feeling is high when talking about something that affects so many families and households across the country, this should not be a debate with personal abuse or accusations of bad motive. I ask everyone following the debate at home to consider that, too. If we instead took a moment to assess the matter properly and considered not just the impact on the 6 million affected families but what is in the best interests of our economy as we recover from the pandemic and, crucially, what we need as a country to be able to face the inevitable shocks and economic problems that will come our way in the future, we would decide that it would be unconscionable to take this money away.

[Dame Angela Eagle (Wallasey) (Lab)]

In my constituency, £10.5 million will disappear from the spending capacity in our local economy when more than 10,000 people and working families lose access to this benefit. Does my hon. Friend agree that that will have a tremendously bad effect on local spending power?

[Jonathan Reynolds]

My hon. Friend is exactly right. The reduction of £20 a week for 6 million low-income families will be the single biggest overnight cut in the history of the welfare state—bigger even than the cut to unemployment benefit in 1931 that caused the Government of the day to collapse. The scope of the cut, affecting one in 14 British workers, is also unprecedented. For those reasons alone, it is right that we are having this debate and that our constituents know where we stand.

[James Cartlidge (South Suffolk) (Con)]

The hon. Member is courteous in giving way, but his proposal would cost £6 billion. Which tax would he raise to pay for that?

[Jonathan Reynolds]

Will the hon. Member tell me how many households in his constituency are in receipt of universal credit? I am giving him a chance to put on the record how many of his constituents are affected. There is a whole section of my speech in which I will tell him how the Government can afford to pay for this.

I did not know that the hon. Member did not know the figure for his constituency—I promise that I was not trying to catch him out. I was simply trying to make the point that the recovery of his local economy would be adversely affected by taking that spending power away, as my hon. Friend the Member for Wallasey (Dame Angela Eagle) made clear for her constituency.

[Jim Shannon (Strangford) (DUP)]

I thank the shadow Secretary of State for introducing this important debate. Northern Ireland has the highest levels of child poverty in United Kingdom of Great Britain and Northern Ireland. My mailbag, like everyone’s, is full of real-life stories of people worried sick about how they will be affected. Does he agree that the removal of the £20 universal credit payment will plunge even more people into food poverty and have a detrimental effect not just on their pockets financially but on their health? It is a double whammy, and they just cannot take it.

[Jonathan Reynolds]

I agree with the hon. Member. Opposition to the cut is truly universal, for those reasons. It includes MPs, charities, unions and six former Conservative Secretaries of State for Work and Pensions. If we are being honest, I think several serving Conservative Ministers also share that view. In this debate, I want to knock down the fiction that there is somehow a choice to be made between cancelling the cut and getting people back into work. I want to talk about what the cut will mean for the families affected and the impact that it will have on all our local economies and the national resilience necessary to meet future challenges. I also want to talk about how the Government could easily fund universal credit at its current rate without making this counterproductive and harsh cut.

[Sir Desmond Swayne (New Forest West) (Con)]

I am inundated every week by employers who simply cannot get workers. Should we not be seeking to raise the sights of many working people to get another, better-paid job? They are out there.

[Jonathan Reynolds]

In the right hon. Member’s constituency, 4,000 households are in receipt of universal credit. I want to ensure that, at the beginning of the debate, we knock down the argument, which we have also heard from the Prime Minister, that a focus on jobs will somehow mean that we do not need to keep universal credit at its current level. Of course we should get people back into jobs, but it is simply false to say that the choice is between keeping the uplift and doing that.

Let me remind the House again that universal credit is an in-work benefit. Almost half of the incomes that Government Members wish to cut are of people in work. Either the Prime Minister, the Cabinet and several Conservative MPs do not know how universal credit works or they are being wilfully misleading. I do not know which is worse. Let us have a real debate rather than this ignorant rhetoric about work or welfare, because—this is the crucial point—if as a country we could get the people affected into better-paying jobs, the cost of keeping universal credit at its current level would go down automatically. That is exactly how the system is designed to work. Anyone saying that the cut needs to happen to get people back into work, or to get them working more hours, does not know what they are talking about.

[James Cartlidge]

rose—

[Jonathan Reynolds]

I will give way to the hon. Member one more time.

[James Cartlidge]

The hon. Member is kind. I hope he will answer my intervention rather than re-intervene on me; I found that very odd earlier. Is it better in principle that people receive £20 through the benefits system or through going into longer hours, with more progress in work and building up a career where there is no limit on what they achieve?

[Jonathan Reynolds]

Of course it is better that people are in work, but the whole point of reform in this area over the last decade and a half has been to try to create a system that integrates with the world of work. I cannot see how the hon. Member does not understand that. I cannot see the logic in his argument that a cliff edge is necessary for the outcome that he wishes to see.

[Ellie Reeves (Lewisham West and Penge) (Lab)]

My hon. Friend makes a compelling argument about universal credit being an in-work benefit for many people. I have been inundated with calls from constituents who are supermarket workers, teaching assistants and carers. They are already working long hours and they have gone above and beyond during the pandemic. Does he agree that this is not the way to thank those hard-working key workers for everything that they have done for this country?

[Jonathan Reynolds]

I agree absolutely; that is the point. We saw in the exchanges between the Secretary of State and me on Monday, as well as in Prime Minister’s questions, that the Government’s proposition is that somehow people working full time will be able to work 50 or 55 hours a week, on top of what they are already doing. The Opposition are more than happy to have a discussion about raising pay—we have plenty of ideas. Let us discuss raising the minimum wage to at least £10 an hour now or reducing the universal credit taper rate so that people keep more of what they earn. To dress up this devastating cut as a choice between supporting jobs and supporting families is an insult to the millions of working people who will see their incomes drop. Hon. Members who support the cut should at least have the decency to stand up and say so rather than hide behind straw men.

[Alex Cunningham (Stockton North) (Lab)]

I will give my hon. Friend some statistics from my constituency, where 37% of all children—that is 6,802—are living in poverty, a figure that has increased considerably under the Tories. Thousands of them and their families rely on universal credit to put food on their tables. With the latest figures showing inflation rocketing, and that is very much on food, does my hon. Friend agree that adults and children will go hungry if the Government do not do the right thing?

[Jonathan Reynolds]

My hon. Friend is absolutely right. However, it is also important to say that there are 1.7 million people this will affect who cannot work, owing to disability, illness or caring responsibilities. I have not heard a single mention of them from the Government, or the offer of any help coming their way to mitigate this cut.

[Chris Stephens (Glasgow South West) (SNP)]

The Government said at the time they increased the universal credit payment that it was to pay for essentials during the pandemic. I take that to be food and fuel. Does the shadow Secretary of State believe that food and fuel prices have fallen since the pandemic, and if not, does that not just do away with the Government’s argument altogether?

--- Later in debate ---

[Jonathan Reynolds]

I am grateful to the hon. Member, who makes two points: first, if the Government believed this level of need was evident during the pandemic, the crisis that people face—whether that is illness or redundancy—does not change whether or not there is a global pandemic; and crucially, yes, he is right that fuel costs are going up. We had the announcement this morning that inflation is over 3%. Anyone who has been to a British supermarket in the last few months knows how much food is going up, so the need is absolutely there. Frankly, the Government’s case that somehow this support was needed in the pandemic and can be taken away has absolutely nothing to it.

That brings me to one more point I want to raise before I talk about the impact on people. I want to highlight again the situation for people on legacy benefits, such as employment and support allowance and jobseeker’s allowance, who never had this uplift to begin with. I believe, and I have said so many times, that these people are the victims of discrimination. Universal credit is the clear successor benefit to these benefits, and the decision to not uprate them was initially presented to this House as a technical problem, rather than a policy choice. The situation they have been put in is grossly unfair, and we will continue to keep raising this. The only reason I did not include those benefits in the wording of this motion today is that I did not want any Conservative MP to be able to cite that as a reason to refuse to back this motion.

It is the impact on people that should be paramount in our minds. I am sure all hon. Members, whichever side they are on, have been inundated with people getting in touch to tell them exactly how much this money means to them. The leaked internal analysis from the Government that appeared in the Financial Times last week described the cut, in the Government’s own term, as “catastrophic”. The human cost of taking this money away cannot be overstated: £20 may not seem like much to some people, but it is makes the difference of having food in the fridge and still being able to put the heating on, or being able to get the kids new school shoes without worrying how to pay for them.

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

My hon. Friend is making a very powerful speech. In Oldham, there are over 11,000 people in work reliant on universal credit with 22,000 children. Is he as concerned as I am that the long-lasting impacts of driving these children into further poverty—as we saw, for example, in the Nuffield Foundation report yesterday—are going to be detrimental not just for those families, but for society as a whole?

[Jonathan Reynolds]

My hon. Friend is my constituency neighbour, and she knows that her constituency is very much like mine. We have seen the impact of the austerity years and what that has meant, not just in terms of the impact on people, but with how much need that has pushed on to other services—the NHS, the police force—and, frankly, with how so many of the preventive services that were once there have had to go from local authorities. The position people are in, as things stand today, is not one in which anyone could reasonably say that there is capacity to further reduce support and take so much money out of local economies.

[Margaret Greenwood (Wirral West) (Lab)]

According to the Resolution Foundation, over 40% of people on universal credit were food-insecure before the Government introduced the £20 uplift, so does my hon. Friend agree that by cancelling the uplift and cutting universal credit by £20 a week, the Government are taking the money from people that they need to put food on their tables and to support their families?

[Jonathan Reynolds]

Again, no one could dispute that case. Last week I went on a visit to Peterborough, which is the Conservative constituency most affected by this cut, and I went to volunteer in a local food bank. Anyone volunteering in that situation and simply observing the level of need coming through the front door could not in any good conscience say that the people going there could sustain themselves if this cut were to take place. Some of the volunteers there are people who work for the NHS, who in their spare time are volunteering on the vaccine programme and, in their spare time from that, are volunteering at the local food bank. That is what the people of this country are doing, and if only they had a Government who were willing to give the same level of commitment, how much better things would be.

[Clive Efford (Eltham) (Lab)]

My hon. Friend is making an extremely powerful speech. We have been through a period when communities have come together, and he has just talked about volunteering and the way that communities have come together to deal with food poverty in particular. Children have been involved in that, and this is the Government who failed to feed our children during holiday time, so it is no surprise that they are bringing in this cut. Even in a constituency such as mine in London, over 5,000 children live in households that receive universal credit and are going to face a cut on top of what we have all been through over the last 18 months. It really is time that this Government started to think about the consequences of what they do to the poorest people in our communities.

[Jonathan Reynolds]

Again, I think the case my hon. Friend has made is self-evident. I would also say that if we look at the moments of national crisis in British history and at how the country has responded to those, we see that we have always sought to learn from those crises and to take the best bits of our response to them. This announcement from the Government—the debate today—is their saying, “There’s nothing to take from this; there is nothing to keep that sense of solidarity or that action to try to improve things for people, and we are walking away from it.” I think that that, perhaps more than anything else, is what makes so many people frustrated with the tin ear the Government are showing.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Erdington may be rich in talent, but it is one of the poorest constituencies in the country. Some 63% of working age families with children in my constituency face a £1,040 cut in the biggest overnight cut to social security in the history of the welfare state. Does my hon. Friend agree with me that the Government seem to be oblivious to the despair of mums and dads who are wondering how they are going to be able to feed their kids as a consequence of soaring bills—electricity, gas—and prices in supermarkets, and that at a time like this this cut is truly the cruellest cut of all?

--- Later in debate ---

[Jonathan Reynolds]

Again, I am pleased my hon. Friend has been able to place this on the record for his constituency, because that is how everybody sees it.

Last week I met some of the families who gave evidence at the Work and Pensions Committee—great people, real people—and they told it exactly how it is. On Monday, the Under-Secretary of State for Work and Pensions, the hon. Member for Colchester (Will Quince), tried to say this actually is not a cut because the Treasury never budgeted to keep the uplift in place. Let me tell him that it is a cut to those families who came here to give evidence in the session last Wednesday, and it is a cut, as hon. Members have said, at a time when other things—the cost of heating, the cost of food, the rate of inflation—are already going up in real terms. Let us in this debate deal with the reality of people’s lives, not with Treasury fictions.

[Andy Carter (Warrington South) (Con)]

I took a moment to look back at some of the calls the hon. Gentleman has made over the last couple of weeks to increase benefits. When I added them all up, I found that there is not just the £6 billion for this benefit, but a total of about £15 billion that the Labour Front Bench has called for. Can he tell us how we are going to pay for that, because it is real people who will be paying for those benefits?

[Jonathan Reynolds]

I will tell the hon. Member about the real people. There are 7,700 families in his constituency whom this cut will affect, and the decisions the Government will make—[Interruption.] I am not going along with Conservative Back Benchers trying to tot things up and coming out with them in the middle of a debate. No, let us talk about the real impact on the 7,700 families in his constituency. The message he should be considering is: what will happen to his local economy and what will happen to national finances by taking that money away from them? This is a very important point.

[Rachael Maskell (York Central) (Lab/Co-op)]

Some 7,850 of my constituents will in three weeks’ time also lose £20 a week. Does my hon. Friend agree that the real cost will be the impact on people’s lives—the lost opportunities for those children’s futures and the hopes we all carry? Is it not right that we invest in people, not see this as a cut in itself?

[Jonathan Reynolds]

Absolutely. That investment in people is essential, and this uplift that we are talking about today cannot be considered without remembering the benefits freeze that lasted for four years prior to 2020. As the former Secretary of State, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), has said, the uplift only really restored what the value of UC would and should have been.

The pandemic exposed what many of us already knew: that social security in this country had become so threadbare it simply would not have got us through the pandemic. Since 2010 there has been unprecedented growth in in-work poverty in the UK, and food banks have become the norm in every town and city. No constituency has been exempt from that, and, most of all, one in eight working people in the UK is currently living in poverty. So the Government should not be seeking to congratulate themselves on making this uplift during the pandemic; they should ask themselves why they let things get so bad to begin with.

There was another laughable moment in Question Time on Monday when the Secretary of State compared the Government’s response to that of the Labour Government after the global financial crisis. Back in 2008 there was a functioning and supportive welfare state: tax credits acted as a superb automatic stabiliser; Jobcentre Plus had already been created, bringing together the old social security offices with the jobcentres, which all Governments since have recognised as a huge strength; unemployment did not hit 3 million, as initially predicted; and initiatives such as the future jobs fund played their role. So that Government had already done the hard work back then, and that is the lesson this Government need to learn.

As many Members have said, great as the impact on families is, we also have a responsibility to consider the impact of this on the country as a whole. The money we are talking about is spent in local shops and on local services, the very businesses that have had such a tough time because of the necessary public health restrictions most of us here backed for good reasons.

The recovery is promising, but it is not a done deal and there is a lot of ground to make up. This is the wrong decision for the economy and it also fails to learn the lessons from the pandemic and build the resilience we need as a country to face future challenges.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I absolutely support everything my hon. Friend is saying in his speech, and the Government should listen hard, because we have all lived through a very difficult 18 months and there are increasingly difficult times ahead as well. We have learned many lessons during this period, such as that we should invest more in the things we value most. This money is targeted at families; 40% of families with children in my constituency will lose out as a result of this decision, and that will have an impact on those children. We have one of the most expensive childcare systems in the world and we know that working families are struggling. The Government can do something simple to support those families by changing their direction on this cut today.

[Jonathan Reynolds]

My hon. Friend is right. The lever the Government have to alleviate this basket of problems—childcare costs, fuel costs, food costs—is to not go ahead with this decision.

My hon. Friend’s intervention brings me to my next point. If it really is the Government’s ambition to level up the UK, it is hard to see how that can mean anything when this cut disproportionately affects the places the Government say they want to boost. Despite all the rhetoric, this cut will take £2.5 billon out of local economies in the north and the midlands, including Stoke-on-Trent which would lose over £32 million and Blackpool which would see £23 million cut.

We all know this money is not being invested or hidden away; it is being spent. It is being spent in shops and restaurants in local high streets that desperately need a boost after last year. After the last week, it seems that the Government are keener on taxes up than levelling up.

[Mr Gagan Mohindra (South West Hertfordshire) (Con)]

On the hon. Gentleman’s comments about the last Labour Government and the 2008 financial crisis, what support did that last Labour Government give to those families?

--- Later in debate ---

[Jonathan Reynolds]

I addressed that in an entire section of the speech so I refer the hon. Gentleman to Hansard.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

Actually, that is a really important point because the hon. Gentleman was guilty in his comments on the previous welfare system of looking at it through rose-tinted lenses. There were huge problems with the previous welfare system. It caught hundreds of thousands of families in poverty traps, and at every opportunity since 2010 the Labour party resisted our efforts to reform welfare, to make work pay and to provide better financial support for families in Britain.

[Jonathan Reynolds]

I have a lot of time for the right hon. Gentleman, as he knows, and he has been vocal in opposing the Government and we all have respect for that, but I must put a few things on the record in response to his intervention. The reductions in poverty under the last Labour Government were tremendous, and we did not even know how good they were until we got the evaluation, sadly a few years later when already so much of that had been taken apart. Of course there were problems with the previous system, but no one should try to claim that the last Labour Government were not a reforming Labour Government. As the right hon. Gentleman knows, after that Labour Government came to power a single parent did not have to go out and look for work until their eldest child was 16—there was no regime in the world like that—and Jobcentre Plus did not exist. So there was a lot of reform and the system was improved, but crucially—this is the big difference from the reforms of this Government—our reforms brought poverty down, brought more people into the workplace, and made this country stronger, more resilient and a better place for everyone. That is why, sadly, our record is overwhelmingly better than this Government’s.

[John Stevenson (Carlisle) (Con)]

Everybody acknowledges that the way out of poverty is employment; why when a Labour Government leave office is unemployment always higher than when they first went into office?

[Jonathan Reynolds]

I have dealt with this intervention before—being involved in so many Finance Bills does give that experience—and that is false; a quick Google search will put the record straight for the hon. Gentleman.

The great Labour Government after the second world war who created the welfare state, built 1 million council houses and created the national parks while having to deal with demobilisation after the war are not hugely relevant to people who want to cut £20 a week from 6 million families today. But I will always defend the post-war Labour Government, the greatest Government in the history of this country.

[James Cartlidge]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

No, we have had enough history and the hon. Gentleman has intervened twice; we can look forward to his speech.

In relation to the tax rises announced last week, the combination of this cut and the rise in national insurance is absolutely outrageous. As many as 2.5 million families will lose £1,300 a year. This Government are already a high tax Government, and due to that and the decision to freeze personal allowances and hike council tax combined with the much lower than expected Government borrowing costs, projections are already coming in for the October spending review suggesting that there is far more room for manoeuvre than anyone previously thought.

The Resolution Foundation, the most respected analyst of the labour market and welfare state in the country, said last week that the Chancellor

“will be significantly boosted by the good news the Office for Budget Responsibility (OBR) will deliver within its updated forecasts on 27 October. Borrowing this year is likely to come in several tens of billions lower than expected, having already borrowed £26 billion less than previously forecast in the first four months of 2021-22. More importantly, if the OBR moves its forecast for the long-term scarring effect of the pandemic on the British economy (currently 3 per cent of GDP) into line with the more optimistic consensus (the Bank of England now expects scarring of just 1 per cent) he will have a windfall that lasts, possibly to the tune of around £25 billion a year.”

I believe the final forecast might be slightly less generous than that, but the point remains that a decision to keep UC and working tax credit at the current levels could be made within the fiscal headroom the Chancellor already has when the spending review takes place.

As the Resolution Foundation made clear,

“To govern is to choose”,

and the question for hon. Members today is do they really believe that those on the lowest incomes, in some of the hardest jobs in the country, who got us through the pandemic, should take a disproportionate share of the burden going forward? Is that fair, is that a recipe for national success and is that ensuring our country is as resilient as it needs to be to meet future challenges? No, no, and no again.

Looking to the future, I want to replace UC with a better system because I recognise that the argument we are having today over the core amount is not the only problem: the five-week wait is a huge issue for people; the level the taper rate is set at is wholly wrong; and people should be able to keep more of the money they earn. Fundamentally, the Treasury caused a huge problem by causing UC to be associated for many of our constituents with austerity, cuts and sanctions, but that is an argument for another day. The choice we have to make right now is whether to proceed with this cut and, whichever way we look at it, we should not. I hear there are rumours that a reshuffle is under way. As Members will know, if a Cabinet Minister were to lose their job today and return to the Back Benches, they would receive a pay-off of £15,000. Will anyone in this debate say that that is unaffordable? It always seems to be a different rule for the people we are talking about than for everyone else in the country.

I implore Members to think about the wide-ranging effects of their decision in this place today. Charities say that the cut will cut a lifeline to millions. Economists say it will suck spending from our local high streets. Even the Government’s own internal analysis makes it clear that it will be catastrophic. No one in this House can say they did not know. No one will be able to say they were not warned. The effects of this cut are clear as day. It is wrong for our constituents, wrong for the British economy; quite simply, it is wrong for Britain. Conservative Members have a choice to make. I, and the millions this cut will hit, implore them to see sense, back the families who sent them here, and cancel the cut.

--- Later in debate ---

[Dr Coffey]

I will not, because I am conscious that we are nearly an hour into this debate and many hon. Members will want to speak about this important matter.

Right across Government, we are investing to help people to get better-paid jobs, whether that is through digital boot camps, the lifetime skills guarantee, the £650 billion infrastructure programme that will generate 425,000 jobs, the £8.7 billion affordable homes programme expected to support up to 370,000 jobs, and the green jobs taskforce, which goes from strength to strength as we work our way towards net zero. I have referred to the extra funding through the health and social care levy, which will include support for care workers, but we will not stop as we help people to progress in work. This Conservative Government and Conservative party want people to prosper as we build back better and level up opportunity across the country.

Tackling poverty through boosting income is one element and we will continue to support people with the cost of living. We have kept the uplift in housing support through the local housing allowance rates, as I mentioned to the hon. Member for York Central (Rachael Maskell), maintaining it in cash terms this financial year. We spend over £6 billion on supporting childcare, which is equivalent overall to about £5,000 per family. As I said to the House, that can be up to £13,000 per family for people on universal credit.

We have increased the automation of matching benefit recipients with energy suppliers to make it easier for the warm home discount to be awarded almost automatically. I was very pleased to see that more mobile and broadband suppliers stepped forward with social tariffs for people, which is why I am delighted to let the House know that we are working with those suppliers to make it easier for them to verify the identity of people seeking those special discounts. I am also leading cross-Government action to do more on tackling poverty and the cost of living, which will help many families with their day-to-day costs.

We have heard that universal credit is flexible and that people are treated individually. I am very aware of the challenges on food insecurity. That is why we included the questions we did in the family resources survey so that we can start to think about how we can direct our policies specifically to those people. As my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) was trying to get out of the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), what is accurate—I am pretty sure to say—is that, in 2008, tax credits may have changed, but that was effectively for people in work. What we did not see was a boost in the unemployment benefits, so when the shadow Secretary of State criticises us for putting an extra £20 a week in the pockets of people who were newly unemployed, I do not think that his assertion is defensible.

One thing that the House may see in a couple of years is that, although in the last year of the last Labour Government we saw a reduction in relative poverty, that was largely driven by the fact that higher-paid people were unemployed—we saw a shrink in relative poverty simply because of a statistical anomaly. We have to deal with real-world facts and make sure that the provision of cash, by helping people with their income, is really the way to help them to get on in work but also to help them with the cost of living.

[Jonathan Reynolds]

It is incredibly generous of the Secretary of State to take an intervention from me on the Front Bench, but if relative poverty is what we are measuring—although Conservative MPs have broadly run away from that measure since saying that they would accept it—I have to say that child poverty in the UK is heading towards 5 million under this Government.

If the Secretary of State wants a discussion about the legacy of 2008, rather than about what is happening today, let me say first that benefits had not been frozen for four years under the Labour Government, so they kept their real-terms value. Secondly, the Secretary of State says that she has put more money into the system, but take the money for housing that she mentioned on Monday. That was not more generosity; it was not a boost; it was funding the level of policy that the Government already had with the 30th percentile. They were not improving on it; they were simply putting in the money that should have been there from the beginning. That is the crucial difference.

[Dr Coffey]

The last Labour Government—admittedly that was quite a long time ago and many Members of this House will not have been serving here then—did not build enough homes. Prices were not tackled, money was not well spent and we were left with no money.

The shadow Secretary of State will be aware that I am not a fan of talking about relative poverty, because it is simply a statistical element. However, since 2010, there have been 60,000 fewer children in absolute poverty before housing costs. Children living in workless households were around five times more likely to be in absolute poverty last year than those in households in which all adults worked. We know that full-time work reduces the chance of being in poverty. Overall, there are also 220,000 fewer pensioners in absolute poverty.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Monday 13th September 2021 Commons Chamber

[Dr Coffey]

My hon. Friend is right to praise his local jobcentres. One thing we have done as part of the plan for jobs is increase the number of work coaches, and indeed the number of jobcentres, thus demonstrating to people—particularly those who have been out of work already but are coming off furlough—that we are ready to support them so that they can get back into work as quickly as possible.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

This morning, during her television appearance, the Secretary of State said that a person could make up for the Government’s £20 a week cut in universal credit by working just two extra hours a week. I am sure she is aware by now that she got that completely wrong: the taper rate would of course remove a proportion of those additional earnings, so the net earnings for those extra two hours would be far less than £20. May I therefore ask her if she now knows how many more hours a single parent working full time would have to work to make up for the money the Government is cutting?

[Dr Coffey]

Every single universal credit payment depends on the individual, so I cannot articulate that, but it is fair to say that a number of different levers appear when people work more hours, and that includes the lifting of the benefit cap. There are a number of ways in which people can earn more and keep more of their money when they are working more hours.

[Jonathan Reynolds]

The figure is 10 extra hours a week, so the cut would force that person to work 50 hours a week in total to get what he or she is receiving now. That is why I have said that reducing the taper rate will be our absolute priority in our replacement for universal credit, but it is also why we oppose the cut. It is why six former Conservative Secretaries of State for Work and Pensions oppose the cut. It is why every Labour Mayor, and even Conservative Mayors such as Andy Street, have spoken out against it. It is why the Government’s own analysis, leaked last week, says that the cut will be “catastrophic”.

This is a Government who half the time do not know what they are doing, and the rest of the time they just do not care. Is not the truth that the only way to get the Government to see sense will be the House of Commons voting to defeat them this Wednesday?

[Dr Coffey]

I do not know the basis of the hon. Gentleman’s calculation and his suggestion, but what I do know is that the Labour Government did nothing to help people in the midst of the financial crisis of 2008, whereas we have injected more than an extra £7.5 billion. We recognised the need for the temporary uplift, particularly for those who were newly unemployed and coming on to benefit for the first time. That is why we made the temporary uplift similar to that of the minimum paid through statutory sick pay. We will continue to do what we have been doing: investing in our plan for jobs, helping people back into work and helping them to make progress in work.

Pensions Update

Jonathan Reynolds Excerpts

Tuesday 7th September 2021 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank the Secretary of State for advance sight of her statement and for our telephone conversation this morning after the Cabinet meeting informing me that it would occur.

I believe Governments should keep their manifesto promises. It may be out of fashion—it may even seem old-fashioned—but that is what I believe and that is what is right. Before I address this announcement, I want to make some observations about the triple lock policy itself. The UK state pension is low by international comparison. It compares better when pension credit and the NHS are folded in, and a lot better when occupational pensions are considered, but the core state pension itself is still very important for millions of pensioners. The last Labour Government drastically reduced the link between old age and living in poverty, but there can be no room for complacency. The triple lock and the issue of indexation of the state pension is fundamentally about what the value of the state pension will be in future for working people today when they retire. I reject the presentation of this issue as a source of intergenerational tension or unfairness, because we all have an interest in ensuring that there is a decent state pension in future.

We should never present increased longevity as a problem. The fact that people are living longer is a good thing and it has come about because we have an NHS, because the school leaving age is no longer 14, and because pioneering Ministers of the past, such as Barbara Castle, were prepared to fight for a decent pension and retirement system. There is no doubt that the triple lock has made a significant contribution to restoring the value of the state pension following the Thatcher Government’s decision to break the link with earnings in 1980.

Turning to the Secretary of State’s proposals, the Government’s case, which is that the furlough data and the pandemic have produced a statistical aberration, has to be considered by us alongside the other decision made today, which also breaks the promises in the Conservative manifesto. Of course, we know that the promise on international aid was also broken before the recess. It is more a triple let-down than a triple lock. This decision is not a one-off but a significant repudiation of the basis on which the Government were elected and it would be naive to say otherwise.

I say to the Secretary of State that we simply cannot take the Government on their word alone. Will they show us their analysis that has led to this decision? Will they explain why they could not assess the underlying levels of wage growth with the impact of furlough discounted? Will they publish the legal advice cited as the basis for this decision? Only then could any Opposition or any MP make a decision on what is being proposed.

Finally, while the Prime Minister is well known for making and breaking promises at will, and for frequently being economical with the facts, that does come at a cost. That cost is a lack of trust, so I hope the Secretary of State appreciates that pensioners and workers, as well as the Opposition, need fuller reassurance before any decision can be made on prospective legislation.

[Dr Coffey]

I thank the hon. Gentleman for having read the statement and for recognising some of the challenges that we face. I accept that it is his role and that of the Opposition to suggest that the Government are not taking the right course of action. However, this is where I disagree with him. He referred to the earnings link that was dropped in, I think, the late ’70s or early ’80s. It was not reinstated by the Labour party until the late noughties and was not commenced until the coalition Government were in place. That is why we have followed the triple lock policy for the last decade, recognising that we wanted to restore the earnings link and to see an increase in pensions overall. We have made good progress on that, as I set out, with the £2,050 cash-terms increase in just over a decade.

We have used the earnings link since the policy came into effect a decade ago, and we have done this on the same basis. As for trying to mess about with different bits of earnings, the Office for National Statistics produced some data but we did not find it necessarily reliable, in terms of what could be considered as a substantiated basis to make the change. I have made the recommendation to the Government—that has been endorsed today and I hope that the House will endorse it in the forthcoming legislation—to set aside the earnings link, as we did last year, recognising the challenges of covid and the implications that that would have had last year directly on pensioners. There is the same fairness of approach here.

I do not intend, as is usual, to publish legal advice. That legal advice is quite straightforward. I would summarise it as “The best way to introduce this temporary set-aside is through legislation, just as we did last year.” I intend to take this forward on that basis.

As for making comparisons with other countries, I am conscious that we have a substantial amount of occupational pension here. We also have a whole fringe of pensioner benefits alongside it that are not necessarily available in many other countries. Just this year alone, which is about to come to an end, while the pension cost is about £105 billion, we are spending about £129 billion directly on pensioners. We have genuinely shown a measured approach to supporting pensioners during our time in office. We think this is a sensible thing that will be broadly welcomed by the public, recognising the balancing act that we continue to face.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Monday 28th June 2021 Commons Chamber

[Will Quince]

Recent statistics show that before the covid-19 pandemic, we were in a strong position, with rising incomes and 1.3 million fewer people, including 300,000 fewer children, in absolute poverty, after housing costs, compared with 2010. There were also over 600,000 fewer children in workless households. Our long-term ambition is to support economic recovery across our United Kingdom, and our new plan for jobs is already supporting people to move into and to progress in work.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

In-work poverty has hit a record high and the vast majority of the millions of children in poverty have working parents, but the Government’s response is to cut universal credit this September. There is no sign of an employment Bill to improve conditions at work, and they have also frozen help with housing costs. What is the Government’s plan to tackle in-work poverty? A good way to start would be to cancel that cut to universal credit this September.

[Will Quince]

I thank the hon. Gentleman for that question. As our economy improves, we will increasingly focus our support on in-work progression to improve opportunities for those in low-paid work and support them towards financial independence. As part of our comprehensive £30 billion plan for jobs, there is an extra 13,500 work coaches, the kickstart scheme, the restart scheme, SWAP—the sector-based work academy programme—and our in-work progression commission, which will report shortly on the barriers to progression for those on persistent low pay and recommend a strategy for overcoming them.

[Jonathan Reynolds]

I would remind the Minister that universal credit is an in-work benefit and it is means-tested. If people do progress, they will not be eligible for that support, so it is not an argument for proceeding with that cut in September.

Can I ask the Minister about a significant barrier to work, which is childcare? He will know that soaring childcare costs have to be paid up front, but universal credit is paid in arrears, leaving parents in debt. I recently met the campaign Mums on a Mission, which has been forced to bring legal action to try to make the system work for parents. More people would be able to work the hours they wanted if we got this right, but do Ministers understand just how significant a problem this is?

[Will Quince]

The hon. Gentleman knows that I will not be able to comment on live litigation, but what I would say is that we do have a comprehensive childcare offer, both as a Government and specifically as a Department. I would also say that, unlike the previous benefit system, in which childcare costs could be up to 70% recoverable, in universal credit the figure is 85%, so it is a far more generous system.