Welfare Benefits Up-rating Bill

Debate between Lord King of Bridgwater and Lord Kirkwood of Kirkhope

Monday 25th March 2013 Lords Chamber

[Lord Kirkwood of Kirkhope]

No. I have two remaining points to make before I sit down. First, we have learnt over the past few days that Mr Alan Milburn, the chairman of the Social Mobility and Child Poverty Commission, has made it clear that he thinks that income is important for low-income families when trying to deal with child poverty. Finally, we need to invite the Social Security Advisory Committee to look at all this between now and July.

A lot of work needs to be done, and an annual report would help to inform that work. It is not safe to allow this Bill to continue into its later stages until we are sure that we have some way in which to track its progress and can ensure that those at the bottom of the low-income scales do not get hurt as a result of its provisions. I beg to move.

[Lord King of Bridgwater]

I shall intervene very briefly, supporting the point made by the noble Countess, Lady Mar. My noble friend Lord Kirkwood and I had an exchange last time on this matter, and he has made it clear once again that he does not like this Bill. I do not like it either. I do not think that any Member of this House would like to have this Bill at all, were things more normal and better than we actually find.

Since we have debated the Bill we have had a Budget and we have had Cyprus. If anyone wants to think that the situation is improving, the most significant thing in the Budget was the absolutely frank admission by the Chancellor of the very serious debt situation that we face. We now realise that it will be extremely tough to turn the ship round. Since then, we have had the comments from the rating agencies, and my noble friend may recall an intervention that he allowed me to make in his previous speech that we had better watch out for the rating agencies.

We have already heard that we are on negative watch by the other rating agencies, and that is even in our present situation. If we ally to that some recognition that this Government are not going to be able to stick even to the programme that they have proposed, if we faced a further downgrade from the rating agencies we might start to move into territory where the Government have to borrow to meet our debt at interest rates that are significantly higher. It will not then be a question of benefits being uprated by only 1%; there could be, as in other countries, significant cuts. If we get higher interest rates as well, with the impact on a huge raft of people who depend on their mortgages and who are finding it an extremely tough battle to maintain them, and with the risk of a significant increase in repossessions around the country, we will be in a very tough situation indeed.

To summarise, the purpose of my noble friend’s amendment is simply that at the end of the year we should discover how much we have saved and what the impact has been. If the Treasury is not going to do that anyway, I do not think that we need to spend a lot more time on this amendment, writing complicated additional amendments into a Bill on a matter that will surely be part of the normal purpose of government.

Welfare Benefits Up-rating Bill

Debate between Lord King of Bridgwater and Lord Kirkwood of Kirkhope

Tuesday 19th March 2013 Lords Chamber

[Lord Kirkwood of Kirkhope]

I think it is me, in fact, but let that pass. I am grateful to my noble friend. He and I had a good private discussion about this. I understand the Government’s position and he understands my position as well. I plead not guilty to his charge of being clever. All I am trying to do here is to get an insurance policy to protect people who are on benefits who may well need it. I hope I am wrong. He knows more about inflation than I do, but there is a real risk that in the demeanour of the coalition Government’s policy, which I would support, to try to attract higher levels of growth, it may be a price worth paying—not to let inflation rip, as my noble friend said, but to allow it to rise reasonably in expectation that growth would follow as a result of that. The shift in the policy changes that.

When the Bill was drafted we were in a different position. We are now—we will see tomorrow whether that is correct or not—in a position of the proposals of the noble Lord, Lord Heseltine, for growth, much of which I support. I must say to the noble Lord, Lord Forsyth, that I pay attention to what he says as Britain is a poorer place. These are huge sums of money and we need to work out collectively how we make provision for social protection in future. However, I say to my noble friend—I am looking him straight in the eye—that I cannot accept that this is a safe position to leave the House in. I want the protection—

[Lord King of Bridgwater]

Is not the key point here that the Government have to be able to convey credibility to those around the world who may lend us money? The noble Lord, Lord McKenzie, has made the point very well. We have to borrow a lot of money or there will be nothing like the present level of benefits if we find, as the Minister has made clear, that we are out on the market trying to borrow from countries and lenders who say, “I thought they had a clear plan. Now they’re qualifying it, they may not follow through”. I make this simple point. The noble Lord quite rightly talks about the risk of inflation rising. The risk that he is prepared to accept is that we lose our rating and then we will be in a very much worse state.

[Lord Kirkwood of Kirkhope]

I thought that we had lost our rating. I have now lost my drift.

This is very simple. This is a one-way bet for the Chancellor. If the Government end up with a windfall of £1 billion or £2 billion over and above the saving that I am supporting here, that is completely unconscionable. I am moving this amendment only to try to get an element of inflation protection for benefit claimants. I am grateful to everybody who has taken part in the debate, even the noble Lord, Lord Forsyth. I am sorry to do this to my noble friend, but I want to test the opinion of the House.