Tax Credits

Debate between Lindsay Hoyle and Seema Malhotra

Tuesday 15th September 2015 Commons Chamber

[Seema Malhotra]

I am unclear—[Laughter.] I am unclear about why the hon. Gentleman wishes to make this an issue about the Labour party, and not an issue about why his Government have presented the House with a measure that will have a negative impact on his constituents as well. He will have to account to his constituents for the decision that he chooses to make today when they come to his surgery, knowing that—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I certainly want to hear the shadow Minister, and I would expect Conservative Members to want to hear her as well. If they do not, I am sure that the Tea Room awaits them.

[Seema Malhotra]

Thank you, Mr Deputy Speaker.

As I was saying, this measure is ideologically driven, it is cynical, and it will directly increase levels of poverty in Britain.

--- Later in debate ---

[Seema Malhotra]

I—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I want to hear the hon. Lady’s reply.

[Seema Malhotra]

I thank the right hon. and learned Gentleman for his intervention. He may first want to explain why he voted against the national minimum wage when it was put to this House. We agree about people needing to come off tax credits, but we would do that through an increase in wages and in productivity.

The Government have sought to argue that working people will be compensated for the cuts by the increases in the minimum or living wage. That is contested by the Institute for Fiscal Studies, which says that it is “arithmetically impossible”. Although we welcome the increase to the personal allowance and the introduction of the so-called national living wage, as the Low Incomes Tax Reform Group has stated, any gains from those measures will not negate the impact of these tax credit cuts from April 2016. The IFS recently concluded that families will lose over £1,000 a year on average from cuts to tax credits, while they will gain between £100 and £200 a year at most from the proposed national living wage, and even that is seen as optimistic.

The IFS analysis has also shown that those on the lowest incomes are hit hardest by the Government’s tax and benefits changes. The reduction in annual income over the next five years is most marked for the poorest four income decile groups, highlighting the regressive nature of this Government’s fiscal choices.