Welfare Benefits Up-rating Bill

Andrew Bridgen Excerpts

Monday 21st January 2013 Commons Chamber

The second condition picks up on a point that has already been mentioned by the Opposition. The policy will also be much easier to sustain if more jobs are flowing into the economy. I pay tribute to those on the Front Bench for what they have achieved so far. Some 1.2 million new jobs have been created in the economy during their period in office. That is extremely welcome. We need to make sure that more people already settled here and down on their luck get access to those jobs and can take them so that they can enjoy the benefits of higher income in work.

[Andrew Bridgen (North West Leicestershire) (Con)]

My right hon. Friend makes a valid point—1.2 million new jobs created. He missed one point, however— 1.2 million new private sector jobs.

[Mr Redwood]

That is true, and it had to be the case because the public sector had no money left, as the previous Chief Secretary reminded us, and it was inevitable that action had to be taken to rein in the public sector. I remember that just before the Labour Government left office, they enacted proposals to halve the deficit over the next Parliament, so members of their Front-Bench team in office were fully aware that they had overdone it and they were recommending pretty unpalatable cuts to their colleagues. They did not specify the cuts, of course, because that would have been even more unpopular, but they told us in general terms that there had to be very big cuts.

--- Later in debate ---

[Andrew Bridgen]

Does my right hon. Friend agree that if we put benefits up faster in this country, we would make it more attractive for other EU citizens to travel here and take advantage of our generous benefits system?

[Mr Redwood]

I am rather pleased that our benefits system is a lot more generous than those afforded in eastern Europe, but I also want to make sure that we do not open ourselves up to paying a large number of benefit bills to people from more or less anywhere in the European Union who come here because they have worked out that we have a generous system compared with theirs. That would seem extremely unfair, very tough on British taxpayers and ultimately self-defeating, because people who were working hard and had talent and enterprise would say, “I can’t afford to pay the tax rates in Britain to pay for benefits for everybody else, so I’ll go somewhere else to do my work.”

--- Later in debate ---

[Caroline Lucas]

I absolutely agree with the hon. Gentleman and thank him for his intervention. I think that people do want that to happen, partly because it is what they would want if they themselves fell into difficulties, and it is what they would want for their families and friends, who unfortunately and increasingly are in exactly that position.

[Andrew Bridgen]

rose—

[Charlie Elphicke]

rose—

--- Later in debate ---

[Caroline Lucas]

I thank the hon. Gentleman, who has encapsulated what I said in my earlier intervention and what I am saying now. Yes, it is strange, and disappointing.

Let me say a few words about RPI and earnings. The right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) and the hon. Member for St Ives (Andrew George) have tabled amendments on earnings that would improve the Bill, and I support them. However, we have a public sector pay freeze, and earnings growth right now is slow; people are experiencing falling living standards as energy bills and food prices rise faster than income. In the longer term, however, earnings are important. Since the second world war, the UK norm has been for earnings to rise faster than prices, with real wages rising in most years, driving living standards higher.

[Andrew Bridgen]

Will the hon. Lady give way?

[Caroline Lucas]

Let me make a bit more progress.

It is worth remembering that benefits were linked to earnings until 1980, when the Thatcher Government changed the link to prices in order to save money. That was a deliberate and aggressive policy to run down benefit levels. In 1980, unemployment benefits were one fifth of average earnings; today, they are one tenth. Earnings are important in the long term, but in the current context, I worry that focusing on earnings when they are so low, without the link to RPI, risks being a smokescreen for existing Government policy. I worry that without the additional protection of a link to prices, the link to earnings will not protect people from inflation risk over the next three years. People must, at the very minimum, be able to keep up with the rising cost of living. My personal view is that benefits should increase either in line with RPI or in line with average earnings, depending on which is higher, but I deliberately tabled a more modest amendment that would just restore the link to RPI because I wanted to press the Committee to provide that minimum protection in the face of this Bill, and hoped that such an amendment would garner more support.

[Andrew Bridgen]

The hon. Lady stated earlier that a 1% increase in benefits is a very small increase on a very small amount of money. Is she aware that the welfare budget is almost a third of all Government spending and is by no stretch of the imagination a small amount of money?

[Caroline Lucas]

If the hon. Gentleman made a distinction between the overall benefits bill and pensions, he might find that he had a rather different set of figures before him.

It is not true that the Government are doing this to be fair. The measure is an unnecessary, spiteful and counter-productive attack on the poor. It is unnecessary because it is ludicrous to blame the unemployed and the low-paid for the deficit and to elicit from them the highest price for paying it off when high earners are receiving tax breaks. As the Government well know but conveniently forget, the culprits behind the entire financial crisis were the bankers on their very high incomes, many of whom do very well from over-generous tax relief on pension contributions and will benefit from the tax cut that is being granted to the highest earners with the abolition of the 50p rate. I welcome the Opposition’s amendment on the latter point.

The measure is spiteful because the Government insist on suggesting that it is somehow unfair that benefits have gone up by 20% when they know very well that 20% of very little is very little, and that in cash terms the average annual increase for those on jobseeker’s allowance over the past five years has been just £2.37—that is hardly the life of Riley that Ministers are pretending. Again and again they frame the debate around misleading percentages instead of the reality of hard cash increases that are far lower for people on benefits than for those in work.

--- Later in debate ---

[Andrew Bridgen]

My hon. Friend makes a valid point about those who move from unemployment into temporary work and the complexities involved in re-applying for benefits under the current system. Does he agree that the introduction of universal credit will improve the situation, remove that uncertainty and make it a much bigger incentive for those who are out of work to take temporary work?

[Andrew George]

I agree with that point and congratulate in particular the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb) on advocating that for many years. He must be pleased. Indeed, I am pleased for him and it is appropriate that that policy is being rolled out. I hope that it will help to iron out the difficulties faced by a lot of people. Having said that, let us see whether it addresses those issues, as I hope it will, when it is rolled out.

If we look back at the principles set out by the Chancellor in the first emergency Budget, we will see that we were clearly told that we were all in it together, that those with the broadest shoulders would bear the greatest burden and that the vulnerable would be protected. Those are the principles against which we must measure the Government. We all have different views on where the lines should be drawn with regard to achieving those objectives, and that is where we get into specifics such as those in the Bill.

It would be a kamikaze mission for me to begin a debate—I am only seven minutes into my speech—by asking my hon. Friend the Minister, for whom I have the highest respect this: what on earth does he know about benefits? He is highly regarded in that sphere. He is respected considerably by people and, indeed, by his political opponents—and rightly so—for what he has achieved. I think we would have ended up with something a great deal worse had he not been in his position.

--- Later in debate ---

[Toby Perkins]

As Members on the Government Benches are fond of reminding us, at one point they thought that the original plans of my right hon. Friend the Member for Edinburgh South West (Mr Darling) were not paying off the deficit fast enough. We now see, however, that under those plans we were actually paying off the deficit faster than this Government are doing. The fact that the Labour party was going to make tough decisions is reflected in a whole number of ways, and we supported—with tremendous reluctance—the very small uplift in public sector pay. We heard from the hon. Member for Brighton, Pavilion (Caroline Lucas) a shopping list of things we should be asking for and ways in which she felt we did not go far enough.

The Labour party recognises that tough choices need to be made, and it agreed to a whole raft of things in all the discussions on welfare. When I go back to my local party, the members ask, “Why are we agreeing with these things?” I say, “Look, it is very difficult. We would always like to make certain different decisions but”—

[Andrew Bridgen]

rose—

[Toby Perkins]

Let me just answer the point raised by the hon. Member for Spelthorne (Kwasi Kwarteng). We would always like to make different decisions, but we are not always in a position to do so. There is a raft of things with which we have agreed that we would not have wanted. We have seen, however, from the policies that the hon. Gentleman has so loyally supported time after time, that when we pursue austerity to the extent that he has been happy to support, demand comes out of the economy. Various retail businesses have gone bust and people are losing their jobs. A huge number of people in the public sector who were consumers are now not spending money, and the level of borrowing that the Government predict is higher than the Labour party proposed under its policies.

--- Later in debate ---

[Helen Goodman]

I am not going to give way to the hon. Gentleman again, because other Members want to speak.

I want to address the Minister. When, in the previous Parliament, we introduced the Bill that became the Child Poverty Act 2010, he gave a great deal of evidence from the Family Budgeting Unit in York and the people at Loughborough about the minimum income standard—the minimum income guarantee. He said that what the Labour Government were doing was absolutely shameful and that benefits were not high enough. Now, however, we see that he is prepared to cut benefits in a way that we never did. The testimony to the great success of this Government’s benefit policy is the expansion in the number of food banks: in Durham last year, the food bank fed 4,455 people, of whom 1,390 were children. That is utterly shameful. To demonstrate that it is not possible to live on £22.96 a week, I am going to try to do so during the February recess. Neither I nor, I believe, any other hon. Member seriously believes that they could live on £22.96 a week. We have to look at this in context.

The Bill is unjust because it is simply not fair in the treatment of people in work and those out of work, and the treatment of people on high incomes and people on low incomes. When the dole was introduced in 1912, it was approximately a fifth of average earnings, and so it stayed until 1979, as the hon. Member for Brighton, Pavilion (Caroline Lucas) said. By 1989, it was 15.8% of average earnings; by 1997, according to the House of Commons Library, it was 13.2%; and by 2015, it will be 11.1%. It is absolutely clear that the Government are trying to take it back to the very lowest point at the very bottom of the recession, irrespective of the impact on people’s normal standards of living. Everything the Prime Minister has said about those with the broadest shoulders bearing the biggest burden is seen to be utterly empty and fallacious when the Government introduce such a Bill.

There has been an ugly attempt to divide the poor between the “deserving” and the “undeserving”—taking us back to the 19th century—between sheep and goats, between strivers and shirkers, and between with those with their curtains closed and those with their curtains open. In my constituency, if people’s curtains are closed at 9 o’clock in the morning, it is probably because they are on nights and they are trying to catch up with their sleep. The Churches Regional Commission states that

“of all the words to describe those who depend on welfare, “feckless” has to be the one that rankles most.”

This attempt to divide has failed, however, on the factual ground that two thirds of those affected by the Bill are in work. The housing benefit and tax credit changes will affect far more people.

The right hon. Member for Wokingham (Mr Redwood), who unfortunately is no longer present, tried to tell us that these changes will improve work incentives. As the noble Lord Freud said in the other House,

“there is an inevitable trade-off between the level of benefits and incentives to work. Raising benefit levels would undoubtedly hamper the work-incentive”.—[Official Report, House of Lords, 13 October 2011; Vol. 730, c. GC498.]

Obviously, that is setting to one side the fact that in order to work harder the poor must be made poorer, but the rich can be made richer.

Let us look at the impact of the changes and the context. In my constituency, 7,200 people will lose out as a result of the Bill, by an average of £500; that will take £3.5 million out of the local economy. If the International Monetary Fund is correct, the second round effect will be even greater, at £4.5 million, so the net upshot is an £8 million loss to the economy of my constituency. It is no wonder shops are closing and small business are folding. That is absolutely illogical, and it goes against what the Chancellor of the Exchequer said about the need to let the fiscal stabilisers work.

[Andrew Bridgen]

The hon. Lady talks of her concern for the poor, and it is shared by right hon. and hon. Members on the Government Benches. The problem is that every time her party gets into office, its policies create more of them. Can she explain why the number of adults out of work for more than 24 months doubled in Labour’s last term in office?

--- Later in debate ---

[Mr William Bain]

This evening’s debate on clause 1 and amendment 12, moved by my right hon. Friend the Member for East Ham (Stephen Timms), is important because it speaks to more than the £13 billion increase in the welfare budget caused by this Government’s failure on growth since 2010 or even the chronic lack of jobs, in a still depressed economy, faced by so many hundreds of thousands of people in our country. This debate speaks to the very values of our society.

Are we a country that is content to divide socially instead of coming together—jobless and workers, low-paid and middle earners—to defeat again the social evils of worklessness, low pay, slumping living standards and poverty? Are we a country that is content to see the doubling of food banks under this Government since May 2010, as 1.4 million people in work find themselves needing to resort to credit to help to pay the rent or the mortgage each month? Are we a country that will fall for the cynical “divide and rule” tactics of the Chancellor, which treat people as pawns in a squalid political game, amid a campaign of demonising the poor and turning neighbour against neighbour, when a responsible Government would seek to unite people rather than divide the country? This clause is rotten economics, ruinous for weak economic demand up and down the country and rank politics, from a Government who can relaunch as many times as they like, but who will never rediscover any sense of moral purpose while they engage in this basest of agendas of social division.

[Andrew Bridgen]

The hon. Gentleman mentions unity. Does he agree that if people lead their life on welfare, it is not only bad for our economy and for our society but tremendously bad for those people themselves, hugely reducing their life expectancy and seriously damaging their children’s lives and prospects? It should be discouraged; the best way out of poverty is through work.

[Mr Bain]

On this pleasant occasion, I find that I entirely agree with the hon. Gentleman. Let us hope that that agreement will continue when he contributes to the debate later, and in future debates.

These measures are not pro-growth, as they were included in the analysis from the Office for Budget Responsibility in December that further downgraded growth forecasts for this year by 0.8% of gross domestic product. They are not pro-deficit reduction, as unemployment is set to become 340,000 higher than the level predicted by the OBR in 2010, and benefit bills will be £13 billion higher than forecast. They are not pro-equality either, as two thirds of the real-terms cuts introduced by clauses 1 and 2 will hurt women, and three fifths of them will hurt working families.

If the Government believe that they are standing up for fairness in the midst of the longest slump for 140 years, this must be either the most incompetent or the most misguided set of measures since those proposed by the National Government in 1931. On every count, they will increase, not cut, inequality in our country, given that 71% of the households affected are on or below the average income, and that 60% of the total savings from the Bill will come from the poorest third on the income scale. Only 3% will come from the wealthiest third. On no count can these measures be described as fair. How on earth can the Government believe that it is right to introduce a 4% real-terms cut in benefits until 2015 while continuing to pay top-rate pension tax relief to top-rate taxpayers at a rate of 50p in the pound? They are doing that while impoverishing the very poorest people at the same time.

Unemployment in my constituency remains consistently high at more than 4,000, or 12% of the working-age population. Although more than two thirds of jobless people experience only a few months out of work at the most, there are more than 1,300 people there who have been out of work for a year or more. Within that group, some 600 people have been out of work for two years or more. If the Government were serious about welfare reform, they would accept that ending the crushing blow of such long-term joblessness, which saps the human spirit and harms long-term job prospects—as the hon. Member for North West Leicestershire (Andrew Bridgen) pointed out—should be the first duty of a responsible Government. Instead, they have put this ruinous set of measures before us tonight.

[Andrew Bridgen]

Given the sense of unity between us, will the hon. Gentleman endorse the coalition Government’s policies that have helped the economy to create 1.2 million new private sector jobs during this Parliament?

[Mr Bain]

I would not endorse that policy because, as the hon. Gentleman knows, that figure includes the transfer of between 200,000 and 250,000 college staff from the public sector to the private sector. I am not going to endorse that figure; he knows that it is not accurate.

--- Later in debate ---

We have to consider the sort of society and country we want to live in. Having a society in which benefits are increasing faster than very low incomes is not a sustainable position. It kills incentives.

[Andrew Bridgen]

Does my hon. Friend agree with my argument that what we have heard in this evening’s debate confirms that the parts of the country with the highest levels of unemployment often also have the lowest average wages and so it is important, if we want to make work pay—I believe all right hon. and hon. Members in the Chamber would agree that work must always pay—that we keep that disparity in respect of work and keep the incentive for people to get into jobs?

[Kwasi Kwarteng]

That is absolutely right.

I shall try to keep my closing remarks brief. The 1% rise in the uprating is surely a temporary measure; I would not want to see this in perpetuity. My right hon. Friend the Member for Wokingham talked about the need to combat inflation. Clearly if inflation is sustained at 3% or 4% over years, that would be very punitive and would make the proposed measures even more difficult for people to bear. So the Government need to keep a firm handle and an eagle eye on the inflation rate. I am absolutely in favour of that, but on the general approach I would not want to see any amendments to this Bill. It is a difficult proposal that we are trying to push through, but many people up and down the country are supporting the Government on it because they feel that the measures we are introducing are encouraging people to get out to work. People also realise—I will close where I started my speech—the appalling fiscal legacy given to us, the incredibly difficult financial circumstances in which the Government found themselves, and the tough and courageous measures we are taking to get us out of the mess.

--- Later in debate ---

[Richard Graham]

I am sorry, but we have no more time for further interventions—

[Andrew Bridgen]

Will my hon. Friend give way?

[Richard Graham]

The hon. Lady will have to wait, and so will my hon. Friend.

I reject completely the idea of moral divisions. This is not an argument between what the hon. Member for Gateshead (Ian Mearns) called a compassion-bypass Government and an economic-car-crash Government. It is about what is fair for the people who pay the taxes that pay for the services and benefits and what is fair for those who receive them. Many of us will have had letters from constituents who work for not very much money, contrary to what the hon. Member for Chesterfield implied, and who point out that their motivation for working suffers when they realise that those who do not work have received more than double the increase in their wage over the past year.

Measuring social justice entirely by how much we spend of other people’s money to generate a system where we now pay more in interest on our debt than we spend on the entire education budget—that is not moral compassion. It is wrong, and that is why we must make practical decisions that are sometimes tough. One of them is being presented to us this evening and I shall support the Bill.