Welfare Reform and Work Bill
Stephen Timms Excerpts(9 years, 4 months ago)
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Mr Duncan Smith
I am not going to give way to the hon. Lady again, because I thought it was pretty simple maths. However, I will give way to the right hon. Gentleman.
Stephen Timms
Given what the right hon. Gentleman was just saying about ESA, what is his response to Parkinson's UK and Macmillan Cancer Support? They point out that, in the case of Parkinson’s, there are some 8,000 people in the work-related activity group with Parkinson’s and other progressive diseases who are not going to get better but who, under his proposals, will lose £30 a week. How can he defend that?
Mr Duncan Smith
As originally designed by the Labour Government, the work-related activity group was to be a transitional stage on the way to work. It included people who had conditions that were perceived to be likely to improve, thus enabling them to move into work, and people who could, even while they were in the work-related activity group, do some work, and that had to be assessed. If a person’s condition is such that they are unable to do any work at all, under the existing rules of the work capability assessment, they should be assessed and moved into the support group. That is exactly the point.
The objective of the work-related activity group—its design was, I think, rather faulty, but we have what we have—is to encourage people to go into work. As the right hon. Gentleman knows, there are no sanctions to make them take work. There are sanctions if they are unwilling to make an effort, but if they cannot take the work they are not sanctioned.
Stephen Timms
The Secretary of State will readily acknowledge that people with Parkinson’s or multiple sclerosis who are in the work-related activity group are not going to get better. Surely he should not be taking £30 a week away from them.
Mr Duncan Smith
As I said—the right hon. Gentleman should remember this—the purpose of the work-related activity group is that the people in that group are deemed to be capable of some work, or at least to be capable of doing some work very soon. That is the point of the group. My point is that when someone becomes too ill to do any work, at that point they are assessed and they should go into the support group. I am happy to discuss the matter further with him elsewhere, but those are the rules as they stand.
Stephen Timms (East Ham) (Lab)
I beg to move,
That this House, whilst affirming its belief that there should be controls on and reforms to the overall costs of social security, that reporting obligations on full employment, apprenticeships and troubled families are welcome, and that a benefits cap and loans for mortgage interest support are necessary changes to the welfare system, declines to give a Second Reading to the Welfare Reform and Work Bill because the Bill will prevent the Government from continuing to pursue an ambition to reduce child poverty in both absolute and relative terms, it effectively repeals the Child Poverty Act 2010 which provides important measures and accountability of government policy in relation to child poverty, and it includes a proposal for the work-related activity component of employment and support allowance which is an unfair approach to people who are sick and disabled.
In government we addressed all the challenges set out by the Secretary of State. We stand for the right to work and the responsibility to work. We believe the Government have a responsibility to ensure full and fulfilling employment. We believe in making work pay so that people are always better off in work, and that work is the best route out of poverty. The deficit has to be eliminated. We believe in controlling the costs of social security so that it is fair on the working people who pay for it and so that it is there for people who need it because they cannot work or earn enough to live.
We support a number of measures in the Bill. We welcome the reporting obligations on full employment, apprenticeships and troubled families. We are committed to a cap on household benefits to help make families better off in work. We support reforms to mortgage interest support that will strengthen work incentives and deliver savings. But this Bill does some very bad things as well. It abolishes the duty of Government to tackle or even to report on child poverty, it breaks promises that the Conservative party made before the election to protect sick and disabled people, and it comes alongside a ruthless reduction in the support to working families through tax credits that will reduce work incentives and undermine the goals of universal credit—
Stephen Timms
I will give way in a moment. Universal credit is a reform which, even though it is running four years late, we still want to succeed.
Andrew Gwynne (Denton and Reddish) (Lab)
Was my right hon. Friend as shocked as I was at the response of the Secretary of State to his intervention in respect of disabled people, especially those who have terminal illnesses as well—cancer and Parkinson’s disease were two of the examples that he used? The Secretary of State does not seem to understand the implications of the changes to the employment and support allowance for these very vulnerable people at a very worrying time in their lives.
Stephen Timms
My hon. Friend raises an important point, which I wanted to return to. The implication of what the Secretary of State said is that, for example, people with Parkinson’s disease or multiple sclerosis should be in the support group, not in the work-related activity group. The Secretary of State needs to follow that through.
Because we support some measures in the Bill, oppose others and want to change yet others to make them workable, we ask the House to support the reasoned amendment in my name and those of my right hon. and hon. Friends.
Mike Wood (Dudley South) (Con)
There seems to be an omission from the list of measures that the right hon. Gentleman supports. Will he clarify whether the Labour party will support the measures to limit child tax credits to two children, and whether that will still be the party’s position in October?
Stephen Timms
I look forward to coming to that part of my speech. The Bill, as I understand it, says that the limit does not apply in the case of tax credits for children born before 6 April 2017. The limit does apply in the case of universal credit for children born before 6 April. That seems to me a pretty clear unfairness and we will oppose that unfairness, and we will table amendments to deal with that and other unfairnesses in the Bill.
Mr Duncan Smith
For the sake of clarity for Opposition Members if not for Government Members, will the right hon. Gentleman tell us, as this is missing from his reasoned amendment, whether he supports in principle that reduction of payments for two children for families on child tax credits?
Stephen Timms
As I told the House, we will table amendments to deal with unfairness in those measures and in others in the Bill, and we will vote on those in Committee in the autumn.
Mr Duncan Smith
I want to be very clear about this. Is it now the official Opposition’s position that they support the limiting of payments of child tax credit for two children from the date specified in the Bill?
Stephen Timms
We support removing unfairness from the Bill that the Secretary of State published. For that reason we will tonight table a raft of amendments to that part of the Bill and others where we think there is unfairness.
Mr Duncan Smith
The right hon. Gentleman is very generous in giving way. I want to establish clarity for those on the Government Benches as well as those on the Opposition Benches. Putting aside the fact that in Committee he may want to table amendments to make changes, do the official Opposition support the principle that those with more than two children should not receive further child tax credits? Is that the principled position they support? That is missing from the right hon. Gentleman’s reasoned amendment.
Stephen Timms
The Secretary of State does not need to wait until the Committee because we will table a raft of amendments tonight: if our reasoned amendment fails and the Bill receives a Second Reading, we will table our amendments. He will see in that list of amendments a series of amendments to deal with the unfairness in that part of the Bill. Those amendments will give him the answer that he seeks. They will appear on the Order Paper tomorrow so that the House can consider them over the weeks ahead.
Barbara Keeley (Worsley and Eccles South) (Lab)
My right hon. Friend is right to talk about removing unfairnesses. There are a number of unfairnesses in the Bill that affect carers. The Conservatives seem blind to the impact of their measures on carers. Can my right hon. Friend say whether we will table an amendment to exempt carers from the benefit cap? Carers should not be affected by the benefit cap and they should never have been affected by the bedroom tax, but the Government would not listen about that either.
Stephen Timms
My hon. Friend is absolutely right. That will indeed be the subject of one of our amendments, because at the moment carers who do not live with the person they are caring for are caught by the cap, and they should not be.
I want to turn to the impact of the Budget changes on tax credits and on universal credit, some of which are in the Bill and some not. Of course the increase in the minimum wage is welcome, but it does not make up for the measures in the Budget, though mostly not in the Bill, that cut tax credits for working families. The claim that they do make up for it—the Secretary of State repeated it in his speech—is, according to the Institute for Fiscal Studies, “arithmetically impossible”. The problem will be especially bad in the next couple of years. The increase in the national minimum wage is phased in over five years, but big tax credit cuts hit immediately next year. Over 3 million working families will lose over £1,000 a year on average, and work incentives will be cut. That is the reason we voted against the Budget. When the Government bring forward the statutory instruments to implement those huge cuts to the incomes of working families, we will vigorously and fiercely oppose them.
James Cleverly (Braintree) (Con)
Do Labour Members not understand the fundamental idea that being in work should always make people better off than being out of work? If so, will the right hon. Gentleman lead his party through the Lobby in support of the proposals in this Bill that make people better off for being in work?
Stephen Timms
I fear that the hon. Gentleman did not understand the Budget. According to the Institute for Fiscal Studies, the Budget reduced the income of 3 million working families by over £1,000 a year on average, and in many cases it lessens the incentive for the first person in a household to go into work. He need only read the very clear analysis of that point by the IFS.
Huw Irranca-Davies (Ogmore) (Lab)
My right hon. Friend goes right to the heart of one of the difficulties involved. I support the idea of getting away from taxpayer-funded poverty pay to a situation where people are paid a genuine living wage. The IFS analysis shows clearly that the people most affected by this change are working families in the second lowest decile. If it goes through, together with the other changes, I will have to go back to my constituents and explain why I have made them poorer in work.
Stephen Timms
My hon. Friend is absolutely right to highlight this, because the IFS is absolutely clear that the cuts in tax credits target working families. Those people will lose out from the changes not in this Bill but in the Budget—that is why we voted against them. This is not about making work pay; it is about making working families pay. As the party of working families, we will be fighting those changes tooth and nail in the period ahead.
Ms Karen Buck (Westminster North) (Lab)
Returning to my right hon. Friend’s commitment to amend unfairnesses in the Bill, will he confirm that one of his amendments might tackle the obscenity of a woman who has been raped having to prove to the Department for Work and Pensions that she has been raped in order to be able to claim tax credits in future?
Stephen Timms
We will have to hear from the Government how they envisage that part of their proposal working, but I can well understand the concern that my hon. Friend raises.
Let me turn to the individual measures in the Bill, starting with the benefit cap. We support the principle that work should always pay and that people should be better off in work than on benefits. That is why our manifesto supported a household benefit cap and the idea that it should be lower in areas where there are lower housing costs.
Lyn Brown (West Ham) (Lab)
Does my right hon. Friend accept that Conservative Members do not seem to understand that two out of three children growing up in poverty are in working households?
Stephen Timms
My hon. Friend is absolutely right. For the first time, the majority of children below the poverty line—quite a significant majority, as she says—are in working families. That is a reflection of how things have gone over the past few years.
To avoid hardship and unfairness with the reduction of the benefit cap, we will press for some people to be protected from the cap. My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) referred to the position of carers. Under the current cap, carers who live with the person for whom they are caring are exempt, yet 8% of those affected by the cap are carers. That is because carers who do not live with the person they are caring for are included in the cap. We want that to change. We think that those with the very youngest children should not be affected by the cap. We also want protection for those affected by domestic violence. As it stands, those who have been affected by domestic violence can be exempted from job-seeking requirements at the jobcentre, but if they are living in supported accommodation a cap will apply. The amendments that we will publish tonight would exempt them along the same lines as the current exemption in jobcentres.
It is absolutely vital to keep the implementation and the impact of the benefit cap policy under scrutiny. There must be jobs for people to move into and childcare available to help them. We need to be vigilant against increases in homelessness and child poverty. We also need to make sure that the policy does not have knock-on consequences for councils and others which mean that it ends up costing more than it saves. If the Bill goes ahead, we will seek to add a requirement for the Secretary of State to report to Parliament within a year on the impact of the policy.
Martin John Docherty (West Dunbartonshire) (SNP)
Will the shadow Secretary of State join me in recognising the unpardonable folly of these proposals and their impact on the entire islands of the United Kingdom of Great Britain and Northern Ireland? Does he agree that that is felt not only on the front line by children and women but by the staff of the DWP, who in Glasgow and Bolton are considering strike action because of the effects of these proposals and the stress that they are under?
Stephen Timms
There do need to be some safeguards in place, as I have been spelling out. Indeed, the Government themselves have recognised the need for a fund to protect people in exceptional circumstances. We welcome the extra £150 million for the fund for discretionary housing payments to help mitigate the worst impacts, but it will not be enough. Many local authorities have already exhausted their funds, which are vital in preventing those affected from becoming homeless. With the cap now lower, there will be more demand for discretionary help. We will therefore want to amend the Bill to require the Social Security Advisory Committee to review the funding for discretionary housing payments each year to make sure that sufficient resources are available.
Caroline Lucas
The right hon. Gentleman has talked a lot about child poverty. The benefit cap, according to the Government’s own figures, will push a further 40,000 extra children into poverty, yet he is talking about some amendments around the edges. Will he explain how much extra child poverty is acceptable to Labour Front Benchers?
Stephen Timms
As the hon. Lady well knows, the big impact on child poverty will come from the huge cuts in working tax credits and other changes not in this Bill but elsewhere. I hope that she will join us in fighting very strongly against those changes when the House has the chance to do so.
Andrew Bridgen
The shadow Secretary of State is making a brave effort to defend whatever his party’s policy is on this, but he has very little credibility because the country knows that under the previous Labour Government the number of workless households doubled, so Labour policies not only trap people in welfare but trap people in poverty.
Stephen Timms
Child poverty fell dramatically under the previous Government; now it has plateaued. I fear that because of measures announced in the Budget, it is going to rocket, and we are determined to stop that happening if we can.
Another reform in the Bill that we support in principle is the provision to turn support for mortgage interest into a repayable loan. That is a sensible step, in principle, given that the benefit enables homeowners to retain an asset and potentially gain substantially from rising house prices. However, it must not make affordability problems worse for people struggling to stay in their homes. Repayments must not tip people into repossession and homelessness. The Secretary of State did not tell us what arrangements are proposed for repaying these loans. We will argue that those who access that support should be able to defer repayment until they sell the property without pressure from the Government to do so. The Budget announced an increase in the waiting period for support for mortgage interest from 13 weeks to 39 weeks. That is too long. As it is a loan scheme, why make people wait, particularly as that could force them into the hands of loan sharks? With support for mortgage interest becoming, in effect, a form of low-risk consumer credit, it should be readily available without nine months of delay to those struggling to make repayments.
We welcome the plans to reduce social rents, which will save 1.2 million households £700 a year, but we have grave concerns about the impact on housing associations and local authorities. They will face a huge reduction in rent revenue, drastically undermining their capacity to borrow and to build. The Office for Budget Responsibility says that many fewer homes will be built; the National Housing Federation puts the figure at 27,000. We will table amendments to address that.
Catherine West (Hornsey and Wood Green) (Lab)
Is my right hon. Friend aware that up to billions of pounds will go missing from local authorities? If we lifted the cap, they could build more homes and thereby help address the terrible housing crisis, particularly in London and the south-east?
Stephen Timms
My hon. Friend is absolutely right. Affordable home building is already at a historic low, and the Government need to stop making things worse. We will table an amendment requiring the Secretary of State to produce a plan to make up the shortfall in house building funds that will result from this change.
Stephen Timms
I give way to my hon. Friend, whose popularity among Conservative Members I have noted.
Jeremy Corbyn
Obviously, a reduction in local authority rents is good for tenants—I fully understand that—but does my right hon. Friend know whether the Government have given any consideration to the effect that a consistent drop in rental income over five years will have on the housing revenue account; on housing maintenance, including of the common areas of estates; and, of course, on any future building programme that could have been funded by the housing revenue account?
Stephen Timms
My hon. Friend is absolutely right. The proposal will affect not only new house building funds, but funds for maintaining existing stock. The Secretary of State needs to explain how that shortfall will be met.
We support the aim to provide 3 million apprenticeships, but the Government need to do more than just publish a target in a Bill. We want quality apprenticeships. There is deep concern among businesses and others that the quality of apprenticeships is being watered down in order to increase their numbers, so we will table an amendment to require that the UK Commission for Employment and Skills should provide an independent assessment of whether quality is being delivered.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
Does my right hon. Friend agree that the concern about the impact of the changes to housing rental income relates not just to the immediate shortfall in funding, but to the uncertainty they will create among registered providers, whose business plans are drawn up five, 10 or 15 years in advance?
Stephen Timms
My hon. Friend is absolutely right. Attention has been drawn to that issue, not least by the Financial Times, which has reported that housing associations’ business plans and their loan covenants and agreements with lenders could be at risk, and that even some big associations could go bust. The implications are very serious.
Richard Graham (Gloucester) (Con)
The right hon. Gentleman is a reasonable man, so I am surprised that he cannot see the advantages of the housing policy in, first, reducing rents for large numbers of tenants who are among the poorest people in the land; secondly, obliging housing associations to make a 1% productivity saving each year, which is very small compared with other parts of the public sector; and, thirdly, reducing the welfare spend and therefore the budget deficit. Surely they are all advantages.
Stephen Timms
I think the hon. Gentleman was momentarily distracted, because I have welcomed both his first and third points. We welcome the fact that rents are being reduced, but he needs to recognise the impact that the changes will have. As I am sure he will be aware, housing associations do not share his rather sanguine view of what the changes will mean, particularly for new house building at a time when we all recognise the need for substantial new socially rented housing, which is not being delivered at the moment.
The Bill does not provide a definition of “full employment”. In line with recent research and the previous Labour Government’s definition, our amendment will set the full employment target at 80% of the working-age population. To pick up on a point rightly made in an intervention by the hon. Member for Enfield, Southgate (Mr Burrowes), in our view the annual report on progress to full employment must also set out progress on the target to halve the disability employment gap.
We will support policies that make work pay and increase opportunity, but where the Government are wrong we will not hesitate to say so. The Conservative party promised in its manifesto that it would
“work to eliminate child poverty”.
It is now absolutely clear that it did not mean it: the Bill abandons any pretence that it did. Instead of eliminating the scandal of child poverty, the Bill attempts to eliminate the term. Labour in government was committed to reducing the appalling levels of child poverty left behind by the Thatcher and Major Governments, and we did so. We introduced the Child Poverty Act 2010, with cross-party support, including from the Secretary of State when he was in opposition and the Conservative party. It contained clear targets to reduce absolute and relative poverty, persistent poverty and material deprivation.
We have known for some time about the debate in the Conservative party about the validity of the relative poverty measure, but now it is not just changing the definition. It is interested not in stopping child poverty, only in stopping people talking about it. It is exactly the same with food banks: the Tories want to stop people discussing them. Clause 6(9) tells us that we should not refer any more to the Child Poverty Act and that instead it is to be known as the life chances Act, but there are fewer life chances for a child growing up in poverty, and poverty needs to be reduced.
Getting rid of the targets and measures leaves the Government with no commitment to tackle child poverty at all, just a requirement to publish a mix of loosely connected statistics. Instead of removing child poverty, the Bill seeks simply to remove it from the lexicon.
John McDonnell (Hayes and Harlington) (Lab)
My right hon. Friend is, like me, a London MP. The driver of child poverty in my constituency is a combination of low pay and high private rents. When the cap was introduced, the Prime Minister advocated—there was an element of logic in this—the idea that it would reduce rents in the private rented sector. That has failed in my area and right across London; rents have increased significantly. Have the Government produced any evidence to prove that the cap reduced rents in the private sector at all?
Stephen Timms
I certainly have not seen such evidence. We have just seen the impact assessment, and the figures are in there, so we will have to see what information they provide. I am worried about the proposal—it was made in the Budget, but it is not in the Bill—of a cash freeze in local housing allowance for the next four years, irrespective of what is happening to rents in London and elsewhere.
The child poverty changes are a shameful attempt to brush under the carpet what should be right at the forefront of Ministers’ minds as they make policy and manage the economy. It is, I am afraid, the final nail in the coffin for compassionate conservatism.
Chloe Smith (Norwich North) (Con)
It is always a mystery to me why more Labour Members do not agree with the right hon. Member for Birkenhead (Frank Field) and, indeed, Alan Milburn, who think that the Government’s proposal to measure the root causes of child poverty is an improvement on what went before. Why does not the right hon. Member for East Ham (Stephen Timms) agree with them, or indeed with another 50 of his colleagues? Is not Labour a shambles?
Stephen Timms
I have no doubt that my right hon. Friend the Member for Birkenhead (Frank Field) will contribute to the debate, but I can tell the hon. Lady that he feels very strongly, as we all do, that this huge hit on 3 million working families—it will take more than £1,000 a year from them, with tax credit changes coming in next year—is a very bad thing to do. It will let down working families, and all Labour Members will fight hard against the iniquitous change being made by the hon. Lady and her colleagues.
Before the election, the Government promised to protect those with disabilities from welfare cuts, but that promise has been broken. As has already been discussed, Parkinson’s UK reckons that there are currently 8,000 people in the work-related activity group with progressive and incurable conditions such as Parkinson’s and multiple sclerosis. Macmillan, in opposing the provision, points out that
“thousands…will experience a significant drop in support at some point during their cancer journey.”
As my hon. Friend the Member for Easington (Grahame M. Morris) said in an intervention, that group includes people with learning disabilities and many with mental health problems.
The Bill reduces the level of support for new claimants by nearly £30 a week, from £101 to £73. That change introduces a new perverse incentive, because it increases the incentive for people with health problems to get into the support group by providing a higher payment, meaning that even more people will not get help to return to work.
The recent marked increase in the ESA case load, at a time when unemployment has come down, has been sharpest in the support group. Anyone in the support group will be seriously deterred from taking the risk of trying employment, for fear that it will result in their receiving a much lower level of support if they are then reallocated to the work-related activity group. I say to the Secretary of State that a particular worry is that young people with mental health problems, who ought to be getting help to return to work, are being abandoned in the support group at the moment. We therefore want the ESA measures removed from the Bill.
Simon Hoare (North Dorset) (Con)
These serious issues are arousing passions on both sides of the House. I am slightly concerned that none of the right hon. Gentleman’s colleagues who are candidates for the leadership has decided to put their name either to the amendment tabled by the hon. Member for Bishop Auckland (Helen Goodman) or to the Opposition’s reasoned amendment. Are they not prepared to give us their views?
Stephen Timms
I am glad to be able to reassure the hon. Gentleman that he will be pleased with what happens when the House divides at 10 o’clock tonight.
The Bill seeks to restrict support provided through tax credits and universal credit to families with more than two children. We will aim to amend the Bill in Committee, for example to protect families with multiple births or those whose claim arises because of exceptional circumstances. We do not support locking in a cash freeze for four years for tax credits and benefits. We recognise that reducing the deficit will require savings on indexation, but those decisions should be made annually so that actual inflation can be taken into account. We do not support the accompanying sharp reductions in income thresholds for tax credits and the corresponding cuts to work allowances announced in the Budget, which will be legislated for outside this Bill. They will be a huge setback to work incentives. The whole point of universal credit was supposed to be to improve work incentives; now it is being hobbled even before it has properly got started.
We want progress towards full employment. We want demanding targets for apprenticeships and help for troubled families. We want a household benefit cap, and to make sure that families are always better off in work. We want support for mortgage interest and reductions in social rents that will deliver savings to the taxpayer. We want better economic opportunities, and we want social security to be fairer and more affordable.
However, children who are growing up in poverty—as we have heard, the growing majority of them are in working households—need a Government committed to improving their position. People who because of illness and disability are found by the Government’s own tests to be not fit to work, as can happen to anybody, need social security to assure them of a decent basic standard of living. Families who are doing the right thing and going out to work, often when they are already struggling with low or stagnant wages and increasing insecurity and uncertainty about their future, need a Government who are on their side, not one who will pull the rug out from under them, as the tax credits announcements in the Budget will do.
These are not just matters of morality and social justice, although they most certainly are; this is also about how we secure our future prosperity and stability, ensuring that everybody in Britain can play their part, make the most of their talents and make the most of the ambitions of all.
Emily Thornberry
On a point of order, Madam Deputy Speaker. I made a point of order earlier about when the impact assessments were published, and I understand that there is an inquiry. When we heard the Secretary of State announce that they had been published, my researcher went to the Vote Office and found that they were not available. A phone call was made to the Vote Office in Members Lobby, which said that they had just arrived. This is not right, and I would like your advice about how we can hold the Government to account when they do not publish impact assessments until after the Secretary of State has got to his feet.
Stephen Timms
I wonder whether the hon. Gentleman has reflected on the fact that in 1997 the employment rate among lone parents was less than 45%, whereas today it is getting on for 65%. Those who have looked at the matter have confirmed that that dramatic improvement is largely thanks to the additional incentive from tax credits.
James Cartlidge
The employment statistics are very much on the side of the agenda we have been pursuing: employment is now at a record high. The fact is that this Bill is socially just because it will enable people to stand on their own two feet and to support themselves through their wages, not rely on the state. That is a sound Conservative principle.
Budget Resolutions and Economic Situation
Stephen Timms Excerpts(9 years, 4 months ago)
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Stephen Timms (East Ham) (Lab)
The hon. Gentleman makes an interesting point, and many Labour Members agree with him on this issue. However, if one area agrees to extended opening, as many no doubt would, is not the reality that the neighbouring areas will have to do so as well, so the devolution issue is a bit of a red herring?
Kevin Foster
I would not necessarily agree with the right hon. Gentleman. There were issues involving local licensing authorities, going back to before the reforms that were brought in a decade ago, which meant that some authorities would permit later closing than others. That had worked for some years. There might be a challenge for local planning authorities, however, in that if slightly later opening were permitted, there could be pressure for development on the edge of their area to get around restrictions in neighbouring communities. I understand the difference that the proposals would make for consumers. At the moment, we all know that large supermarkets tend to open between 10 o’clock and 4 o’clock on Sundays, although some of them exploit the ability to have browsing time beforehand.
This is a positive Budget. It is one that we can take pride in, and it will take the country forward. It is notable that it has been based on policies that were agreed and supported by the electorate. The policies were endorsed by 51 of the 55 MPs in the south-west, and I am pleased to be able to support them today.
Jeremy Quin (Horsham) (Con)
It is a pleasure to follow the hon. Member for Birmingham, Erdington (Jack Dromey), and we have also heard five excellent maiden speeches this afternoon. Between them, they covered Walter Scott, the Brontës, George Eliot, Roosevelt and Voltaire. I do not want to sow any dissension within the ranks of the Scottish National party, but I will leave it to the hon. Members for Caithness, Sutherland and Easter Ross (Dr Monaghan) and for Berwickshire, Roxburgh and Selkirk (Calum Kerr) to sort out between themselves who has the more beautiful constituency, to which they both laid claim. All five maiden speakers exhibited the great passion with which I am sure they will defend their constituents in the future. I hope that they would all agree that in setting any budget—for a household, a company or a country—it is best to start with reality.
The reality that we face is a deficit of £90 billion a year and a national debt of 80% of GDP. That should have a sobering effect on all our considerations and, clearly, the former Chancellor Alistair Darling is well aware of it, given his remarks this morning. I hope that where he leads the official Opposition will follow. It is the easiest thing in the world to run up a deficit, and a Government can become very popular in doing so. As the House knows, it is very painful to get it back under control.
The Budget can be commended on many grounds, but its most important characteristic is that it means we can anticipate our national finances returning to surplus during the lifetime of this Parliament—and a healthy and growing surplus at that. To have eliminated a deficit of £150 billion is a historic achievement.
Stephen Timms
Of course, the Chancellor actually announced that he was postponing achieving a surplus for a year, which he said he would achieve by 2018-19. Does the hon. Gentleman welcome that deferral?
Jeremy Quin
I am delighted that the Chancellor set out a clear, smooth plan that will get us to a surplus of £10 billion—a larger surplus than was anticipated previously—by the end of this Parliament, and it will grow from there. I recognise the point the right hon. Gentleman makes, but I am proud of what the Chancellor has managed to achieve. I am sure the right hon. Gentleman would accept that the elimination of a deficit of £150 billion is no mean feat.
As we all know, the best way to eliminate a deficit is to achieve growth in the economy. The best news, which I am sure we would all endorse, is the forecast from the OBR of continuing growth in our economy. It is a solid basis on which to build. I especially welcome the extra 8% investment from business in 2014, and the fact that that is expected to grow this year and next will be an important part of our recovery programme. It is great that we are achieving that growth notwithstanding the external headwinds. The shadow Chancellor was a little ungenerous in criticising us for having fewer exports to the eurozone: we are growing as an economy, but the eurozone is in a sorry state and it is no wonder that our exporters are suffering at the moment.
All economic forecasts, however, including those of the wise men and women of the OBR, are of course vulnerable. We only need to look at China and Greece at the moment to realise that no one with any credibility would ever claim that we can abolish boom and bust. I therefore welcome the Chancellor’s publication of the new rules of the fiscal charter. This Government, once they have returned the country to surplus within this Parliament, will still be looking to the future. The fiscal charter will help this Parliament and, in particular, future Parliaments to hold the Government to account, to ensure that in normal times they continue to pay down our national debt and restore our national fortunes. Without sound and sustainable public finances, there is no economic security for working people. With sound and sustainable public finances, we will ensure that by the 2030s Britain is the most prosperous major economy in the world.
The whole House would recognise that that prosperity, while welcome, is not a goal in itself. It would be a hollow success if that prosperity was not widely shared among all our citizens. That is why I welcome the Chancellor’s creation of the national living wage and the raising of the basic tax threshold to £11,000. I am delighted that it is a one nation Conservative Government who are seeking to take the lowest paid out of income tax altogether. I went on record supporting the principle of a living wage during the election campaign. It seems to me a positive step in ensuring that work pays for all those who undertake it. The principle that we have a society in which everyone has access to work and is fairly paid for it is surely a good one. Higher wages and lower taxes must be a principle that surely Members on both sides of the House would endorse. The natural corollary of that is that in good times there will be lower welfare expenditure.
I welcome the progress on corporation tax, making the UK an enormously fiscally attractive place in which to operate a business. Combined with the employment allowance, this will ensure that the costs for business of meeting the new national living wage are offset. Similarly, I note what my right hon. Friend the Secretary of State for Work and Pensions said earlier about tax credits. The original system cost just over £1 billion but has risen to £30 billion, which is not sustainable. It needs to be addressed, and I note that we will still maintain expenditure on tax credits in real terms at around the level spent in the 2007-08 fiscal year, under the last Labour Government.
Lastly—I recognise that time is short, Madam Deputy Speaker—I welcome the Chancellor’s announcement on the road fund and the increased expenditure on the NHS to meet the NHS’s own five-year plan, as recognised earlier by my hon. Friend the Member for Halesowen and Rowley Regis (James Morris). My constituency of Horsham has had to accept significant additional house building. That is a concern for many residents. Those concerns will not be eradicated, but they can be mitigated if we all know that there will be enhanced infrastructure to meet the needs of an expanding population. That is especially the case with healthcare, and I look forward to taking up specific issues with my right hon. Friend the Secretary of State for Health. I welcome the additional expenditure on the NHS as a positive recognition that, while we cannot have increased NHS spending without a growing economy, a growing economy may also place increased and different demands on the NHS. I congratulate the Chancellor on an excellent Budget.
Stephen Timms (East Ham) (Lab)
Let me begin, as others have, by congratulating all those who have made their maiden speech during the debate: my hon. Friends the Members for St Helens South and Whiston (Marie Rimmer) and for Bradford South (Judith Cummins) and the hon. Members for Berwickshire, Roxburgh and Selkirk (Calum Kerr), for Caithness, Sutherland and Easter Ross (Dr Monaghan) and for North Warwickshire (Craig Tracey). The House enjoyed hearing from each of them today and we look forward to hearing from them again in the years to come.
Yesterday’s Budget contained a number of ideas that we support, not least because we campaigned for them at the election. For example, we argued that the pathway to a surplus that the Chancellor committed to in March would in fact lead to spending cuts so extreme that they would not be credible. We discovered yesterday that the Chancellor had caved in and accepted our argument. He has deferred the planned surplus for a further year, and I have to say that that was a sensible U-turn. He might have told us that that was what it was, but he did not. As a result of his U-turn, the scale of the cuts, though still substantial, will no longer be as extreme as he suggested in March.
We said that it was unreasonable to try to take £12 billion out of the social security budget in two years. The Chancellor has done a U-turn on that as well. He now plans to do it over four years. We also campaigned for Britain to have a pay rise, stating that an increase in the national minimum wage was key to reducing the cost of welfare. The Chancellor has accepted that argument. On the basis that imitation is the sincerest form of flattery, we welcome his change of heart on that as well.
It is a great disappointment, however, that productivity growth is so low. My hon. Friend the Member for Luton North (Kelvin Hopkins) was right to draw the House’s attention to what the Office for Budget Responsibility had to say about that. It has stated that productivity growth has fallen short of expectations once again. It is a relief that this Budget speech at least mentioned productivity—there was no such mention in March—although it was accompanied by a very thin package. My right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) and my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) pointed out that the cancellation of the electrification of the TransPennine line was a glaring failure if we are to bring about the infrastructure investment necessary to improve productivity across the country. It is a big disappointment that so little is being done.
It is a tragedy that the Chancellor is accompanying his welcome U-turns with such a swingeing attack on the incomes of working families. The analysis published today by the Institute for Fiscal Studies highlights the fact that the proposed tax credit cuts focus on working families. It is working families that are going to be hit. They have been badly let down by a party that had promised to be a party for working people. That promise seems to have been torn to shreds in everything other than the rhetoric. Vital support has been ripped away at a time when so many of those working families are already struggling to make ends meet.
In 2010, the Chancellor promised
“we will bring down the benefits bill”.
At the beginning of this year, the Institute for Fiscal Studies said:
“Real terms benefit spending…is forecast to be almost exactly the same in 2015–16 as it was in 2010–11.”
The benefits bill has not been brought down. The reason is that, in the previous Parliament, the Government failed to tackle low wages and rising private rents, which are the real drivers of welfare spending. As a result we saw 400,000 more people who are in work forced to rely on housing benefit to pay the rent, and 1.5 million more people paid less than a living wage at the end of the Parliament than was the case at the beginning. That led to a £25 billion overspend on welfare by the Secretary of State’s Department. With this Budget, working families are being told to pay for that failure—so much for being on the side of working people.
The Chancellor is cutting tax credits immediately, but taking five years to increase pay. As my hon. Friends have pointed out, the tax credits cuts hit immediately, full scale, from the beginning of the next financial year. The pay rises intended to compensate for them, which in fact do not compensate for them, are being phased in over five years. Working families are losing out in a very big way. This is not about making work pay, but about making working families pay, which is wrong.
Today, the IFS said:
“Unequivocally, tax credit recipients in work will be made worse off”.
That is the reality of what was announced in the Budget yesterday. The Chancellor’s decision to cut tax credits leaves 3 million families worse off. Working families who are doing the right thing are finding that the rug has been pulled out from under them. A couple with one person working full-time on average earnings will lose more than £2,000 in tax credits next year. A single parent trying to provide for her two children, working 16 hours a week, will lose £860 in tax credits next year. Those losses are nowhere made up for by the modest pay rise that that person is likely to receive.
I cannot help wondering what happened to the families test. The Prime Minister promised that
“every single domestic policy that government comes up with will be examined for its impact on the family.”
Well, here are working families being hammered. The measures clearly fail the families test, but they are being announced nevertheless. That is another broken promise from this Government when so many families are losing out.
The IFS says that the striking consequence of yesterday’s cuts is that the work incentive effects of universal credit—if we ever see universal credit; only 1% of benefit claimants have been switched on to it so far, and at that rate it will take 150 years or so to roll out fully—are being substantially reduced.
I have made it clear that we welcome the increase in the national minimum wage—indeed, we campaigned for it. However, as my hon. Friends have pointed out, just because the Chancellor calls it a living wage does not make it a living wage. My hon. Friends the Members for Birmingham, Erdington (Jack Dromey) and for Ellesmere Port and Neston (Justin Madders) emphasised that point in particular. The Living Wage Foundation, the custodian of the living wage, made the position clear last night. It said that
“this is effectively a higher National Minimum Wage and not a Living Wage.”
That is the reality. Simply calling it a living wage does not make it one. The Chancellor is trying to sell us a dud.
That was not the only dud in the Budget speech. I cannot resist the temptation of quoting what the Financial Times said about the Budget speech yesterday: “When you heard” the Chancellor
“say six times in his Budget speech that he had moved British towards a ‘lower tax society’, he made a small but important mistake. He really meant ‘higher tax’.”
Of course that is right. The living wage is based on the full take-up of benefits such as tax credits and housing benefit. With the cuts to tax credits, the current figure for the living wage will no longer be enough and will certainly have to be revised upwards. We are in favour of tax cuts for those on middle incomes and we support the increases in the personal allowance and the higher rate threshold, but cuts to tax credit mean yet again that the Chancellor is giving with one hand and taking away with the other.
What a missed opportunity the Budget was to promote a proper living wage by introducing Labour’s plan for tax breaks for firms that pay a proper living wage! My hon. Friend the Member for Brent Central (Dawn Butler) drew attention to the excellent initiative that Brent Council has introduced along those lines. It is clearly succeeding, and our make-work-pay contracts could have started to boost wages straight away.
My hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) was right to point out that, once again, young people have been badly hit by the Budget, but where there are good reforms, we will support them. We support the Government’s plan for a youth obligation, which is strikingly similar to our manifesto pledge and the Institute for Public Policy Research proposal that underpins it. The principle of earn or learn is right. Of course, it is absolutely vital that the right exemptions to the withdrawal of housing support should be in place. My hon. Friend the Member for Sheffield South East (Mr Betts) underlined that absolutely rightly. Can the Minister confirm in winding up that young people leaving care, those who are at risk of abuse or homelessness and those who are the parents of young children will still be eligible for housing support under these proposals?
We will not support cuts for disabled people. We were told in the election campaign that the £12 billion package would protect the vulnerable and the disabled, but cutting employment support allowance will hit those who are assessed as not fit for work, which is the reason why they are not on jobseeker’s allowance. That includes people with cancer and people with Parkinson’s disease. Ministers said that they would protect sick people in these changes; instead, they are cutting their support, and that will hit some very vulnerable people very hard. It will also drive even more claimants into the ESA support group at even higher cost. In 2010, Ministers said that they would cut the cost of ESA. In fact, given their failure to manage assessments and the failure of the Work programme for ESA claimants, costs have rocketed. ESA will cost £4.5 billion more this year than they said it would in 2011, but that is no justification for punishing the sick.
There is nothing in the Budget to boost the number of homes being built. The cost of renting and buying is soaring out of reach, particularly in London and south-east. My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) drew attention to that. Yet again, rather than tackling the housing shortage and bringing rents down, the Government have chosen to cut housing support.
We welcome the Chancellor’s U-turns from his election campaign, but this is not the Budget that working people need. It leaves working people worse off. Working people needed a Budget that supported them and their families, not one that cut the support that so many people rely on. We support reform that protects those who cannot work and that makes work pay. We will not support cuts that make working families pay.
Madam Deputy Speaker (Mrs Eleanor Laing)
Before I call the Minister, the House should note that several Members who have taken part in the debate were not here for the beginning of the speech of the right hon. Member for East Ham (Stephen Timms). That is discourteous. Some Members who have taken part in the debate are still not here. That is extremely discourteous and has been noted.
Child Poverty
Stephen Timms Excerpts(9 years, 4 months ago)
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Stephen Timms (East Ham) (Lab)
I thank the Secretary of State for early sight of his statement. What he read out today is the obituary notice for compassionate conservatism. It is the death knell for any idea that his party might one day be a party for working people.
It is only a week since we received the news that progress on child poverty has stalled, with most poor children now living in working households. The Conservatives’ manifesto said that they would
“work to eliminate child poverty”.
Instead, their solution is to change the definition—incidentally, at their second attempt; they tried this before and gave up—to remove altogether child poverty from the remit of the Social Mobility and Child Poverty Commission, and next week to announce cuts that will make the problems much worse.
The Child Poverty Act, which the Secretary of State, if I understood his statement correctly, now wants to repeal, received all-party support before 2010, and it put one of the most important duties on Government: to ensure that, in the 21st century, children do not grow up suffering deprivation or lacking the necessities that most of us take for granted. It has not just one, but four measures of poverty: absolute, relative, persistent, and material deprivation. The relative measure is the internationally accepted definition used by every OECD country.
Do the Government accept the importance of relative poverty? Will the Secretary of State clarify that? He told us in his statement that a decade or so ago he was arguing against the use of relative poverty. As he knows, at the same time the current Prime Minister was arguing for acceptance of relative poverty. In what he said today the Secretary of State echoed the words of the Prime Minister last week when he said:
“Just take the historic approach to tackling child poverty. Today, because of the way it is measured, we are in the absurd situation where if we increase the state pension, child poverty actually goes up.”
Of course, the Prime Minister was right. If the Government increase the income of better-off people, they make others relatively poorer. The Prime Minister last week described that as absurd, but that was not what he said when he was trying to re-brand the Conservative party in 2006. In his Scarman lecture he said that the Conservative party
“will measure and will act on relative poverty…poverty is relative and those who pretend otherwise are wrong.”
He went on to say:
“We need to think of poverty in relative terms—the fact that some people lack those things which others in society take for granted.”
That was the Prime Minister speaking in 2006.
So what is the Government’s current view? Is it that focusing on relative poverty is absurd, as the Prime Minister said with conviction last week, or is it the diametrically opposite view that he set out with apparently equal conviction on behalf of his party before? Where do they now stand? The Prime Minister promised that a Government he led would “act on relative poverty”. Why is that promise being broken?
Why cannot the Secretary of State level with the House? He hopes nobody will notice this announcement or its significance because it coincides with the airports statement. Am I right in understanding that he proposes that in his legislation there will be no targets at all, or will he include some targets in it and, if so, will he tell us what they are? I remind the Secretary of State that he and his colleagues all voted for the Child Poverty Act in 2010.
When in government, Labour lifted more than 1 million children out of relative poverty and more than 2 million out of absolute poverty. A key success was raising lone parent employment from less than 45% in 1997 to more than 60% today, mainly thanks to tax credits. That was not about lifting a few people from just below a line to just above it; it was about a very substantial change in the way the economy works. Will the Secretary of State tell us whether next week the Government will announce big cuts to tax credits? That is not about making work pay; it is about making working families pay.
What we need is not a change in the definition of poverty, but a plan to deal with poverty and boost productivity. Ministers should be tackling low pay, but instead they are attacking the low-paid. The Children’s Commissioners for England, Wales, Scotland and Northern Ireland have today come together to warn that the Government’s policies will push more young people into poverty. What happened to the long-term plan? Why have children been left out? Why is the party that promised in its pre-election manifesto to work to eliminate child poverty now planning to increase it?
Mr Duncan Smith
Let me deal with the points that the right hon. Gentleman has made. First, I thought that his comments were a little ridiculous. The idea that this is somehow an obituary for compassionate conservatism does him ill. He knows very well that the purpose of what we are doing is to get rid of child poverty, and that remains our central purpose. As I said earlier—and we are not alone in this—the problem is that if we lock two sets of measures that actually drive spending to rotate people over that line, what we get is a process of churning, but not the real and deeper change in people’s lives. That is the big reason why we want to do this.
The truth is that the previous Labour Government, on their own measure, failed to achieve their target—they failed to halve child poverty by 2010. Worse, in-work poverty actually rose. We could go through the list, but I would have thought that there was a better way of building some consensus than saying that Labour, if in power, could somehow embark on a massive spending spree and everything would be all right. Even Alan Milburn said that was unrealistic, and it remains unrealistic. We have to deal with the world as it is now, and we have to change the life chances of those children.
It is worth remembering that under this Government 74% of poor workless families who found work escaped poverty, and there was a higher poverty exit rate of 75% for children living in families who went from part-time to full-time employment. That has happened under this Government.
The right hon. Gentleman talked about international measures and suggested that we are somehow breaking away from everyone else. The reality is that no other country embarked on a plan to get rid of child poverty using that child poverty measure, and the reason is that other countries realised that it would lead to peculiar patterns of expenditure, with very little result for those who most need help.
The right hon. Gentleman asked whether relative poverty is important. Yes it is, which is why we continue to publish statistics on houses below average income, and we will continue to do so, so everybody will still be able to comment on that. Our focus will be on turning around the lives of the poorest through education and ensuring that they get back to work through skilling, which my right hon. Friend the Education Secretary has been working on.
The right hon. Gentleman talked about the poverty figures published by the IFS last week. He knows very well that before last week most of his colleagues were running around saying, “It’s going to be terrible. The IFS is predicting that child poverty will rise dramatically.” Actually, none of that happened. [Interruption.] Even on those measures, child poverty fell by over 300,000 under this Government.
The right hon. Gentleman referred to a well-respected body such as the IFS, which has all the means at its disposal, and we have enormous respect for its ability to predict things, but its predictions on child poverty have been wrong every single year that we have been in government. In its most recent prediction it was wrong again. Its original prediction was that child poverty would rise to 2.8 million, but that was out by over half a million.
I am not attacking the IFS—far from it—but simply saying that if a Government set a policy on something they find incredibly difficult to forecast or predict, they will end up chasing the error, as the previous Labour Government did. Well over £200 billion was spent on tax credits, but the key point is to turn lives around. That is why we will present this Bill, and why we will change this so that we can reach the poorest children.
Oral Answers to Questions
Stephen Timms Excerpts(9 years, 5 months ago)
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Mr Duncan Smith
As I have said, we did a huge amount to support carers in the last Parliament, and we intend to continue to protect and support them throughout this Parliament. Carers do a huge amount to support people, including in the national health service, and including people with disabilities. This has been our promise and our pledge. We will continue to support carers.
Stephen Timms (East Ham) (Lab)
The Secretary of State referred to the shadow Secretary of State; I am pleased to tell the House that she gave birth to a baby boy last Wednesday and that mother and baby are doing well. The Secretary of State referred to disabled people and the effect on them of the £12 billion benefit cuts. It now appears that the anxiety and uncertainty facing carers will be extended, because we will not get the full list of cuts on 8 July; we will have to await a further statement in the autumn. When the final list of £12 billion is announced, will carers be protected from those cuts?
Mr Duncan Smith
First, will the right hon. Gentleman pass on our thanks—I mean congratulations—to the hon. Lady on her great news? I have already made it clear that we have done a great deal to support carers, and it is my intention to keep on supporting them. It is worth pointing out that our changes improved the lot of carers over the course of the previous Parliament, and will continue to do so.
Stephen Timms
The absence of any reassurance there will give rise to a great deal of concern among carers. May I ask the Secretary of State about working families on lower and average incomes? Will they be better off or worse off once his £12 billion of cuts have been announced?
Mr Duncan Smith
We are looking at welfare, and at how to reform it. When we are ready, I will come forward with an announcement. Let me take the right hon. Gentleman back to the issue of tax credits. We have had many Labour Members going on about tax credits. I looked up how tax credits were increased under a Labour Government. Interestingly, it appears that just before every election, the Labour Government dramatically increased tax credits—in 2004 by 60%; in 2005, just before the election, by 7.2%; and in 2010, just before the election, by 14.4% and by 8.5%. The truth is that his Government have always used benefits as a way of trying to buy votes. We believe that benefits are about supporting people to do the right thing, to get back to work, and to live a more prosperous life.
The Minister for Employment (Priti Patel)
I commend my hon. Friend, who is a strong and assiduous champion of young people and apprenticeships. I assure him that we are engaging with young people in his constituency, promoting nine apprenticeships that are available with his local authority and working in partnership with Kirklees College to promote traineeships. In 2013-14, 616 apprenticeships were started in his constituency.
Stephen Timms (East Ham) (Lab)
We welcome the Government’s belated decision to consult on a charge cap for savers withdrawing their money from pensions. Will the cap apply only to exit fees, or will it also cover recurring charges on investment and income drawdown products? Which? says that that sort of cap could save £10,000 out of a typical £36,000 pension pot, and before her appointment, in March, the new Minister for Pensions said that that sort of cap was needed to protect savers. Will the wider cap be the subject of the Government’s consultation?
Mr Duncan Smith
The right hon. Gentleman is right in the first part of his question. In the second part, as he knows, the Chancellor announced the consultation, which will go out in July. We have concerns about some companies that may be overcharging, and that will form part of the consultation.