Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2017 Draft Tax Credits and Guardian’s Allowance Up-rating etc. Regulations 2017

Anne McLaughlin Excerpts

Monday 6th March 2017 General Committees

[Anne McLaughlin (Glasgow North East) (SNP)]

I draw the Committee’s attention to the explanatory notes to the draft tax credits uprating regulations, which point out that previous Acts required

“the rates of Child Benefit to be reviewed each tax year, however this is not being done for this tax year”

because, as the Minister said, section 11 of the Welfare Reform and Work Act 2016 froze child benefit for four years. The Scottish National party has called on the UK Government to end that freeze, which, coupled with increased living costs, is putting even more pressure on the finances of low-income families. We are talking about pitiful upratings, but for people on such low incomes every penny really counts. The Minister will therefore not be surprised to hear me say that, although we welcome these upratings, the same should be done for all benefits that are currently frozen.

On the other set of regulations, although the SNP disagrees with aspects of the policy intent, the area the Committee is exploring is consequential on a Government policy that is not in itself controversial. That said, we have several wider concerns for the future of the UK economy and the Scottish economy, and they are not just our concerns.

I will not go into too much detail, but the Fraser of Allander Institute has warned that Brexit could reduce Scotland’s economic performance. The institute’s modelling of the World Trade Organisation scenario suggests that after 10 years, GDP would be more than 5% lower—£8 billion in today’s terms—than it would otherwise have been and real wages would be 7% lower, which is equivalent to an average reduction of £2,000 per year. It also projects that the number of people employed would be 3% lower—that is 80,000 jobs.

The Resolution Foundation estimates that, combined with UK Government policies, lower growth post-Brexit will hit low-income households in particular. For example, a lone parent working part time on the national living wage could be up to £2,640 a year worse off by 2020-21. That is just not sustainable for people on such low incomes. A couple with three children on low wages could be up to £3,650 a year worse off by 2020-21.

The European single market has opened Scotland to a market of more than 500 million people. Scottish exports to the EU were worth £12.3 billion in 2015—the EU accounted for 43% of Scotland’s international exports. There are 1,000 companies in Scotland that are owned in the EU, which employ more than 127,000 people. In 2015, Scotland secured more foreign direct investment projects than any part of the UK outside London, and FDI has created 40,000 jobs in Scotland since 2006. Around 181,000 EU citizens live in Scotland, bringing new skills and expertise.

Those are just a few examples of our concerns about the wider economic impact. As the hon. Member for Stalybridge and Hyde said, we will not divide the Committee, but I wanted to take the opportunity to make some comments.

Question put and agreed to.

DRAFT TAX CREDITS AND GUARDIAN’S ALLOWANCE UP-RATING ETC. REGULATIONS 2017

Resolved,

That the Committee has considered the draft Tax Credits and Guardian’s Allowance Up-rating etc. Regulations 2017.—(Jane Ellison.)