Universal Credit and Working Tax Credit

Anneliese Dodds Excerpts

Monday 18th January 2021 Commons Chamber

[Anneliese Dodds (Oxford East) (Lab/Co-op) [V]]

Thank you very much, Madam Deputy Speaker.

With our country still locked down after record redundancies and with even more anticipated, it is astonishing that the Government are still threatening family finances. Ministers could have come to this House and promised that there would be no cut to universal credit in April. They could have recognised the incredible hardship that families have faced in the last 10 months and are likely to face as we continue in the throes of this crisis. We heard the voices of many of those families today in speeches from my hon. Friends the Members for Ealing North (James Murray), for Bermondsey and Old Southwark (Neil Coyle), for Birkenhead (Mick Whitley), for Bradford East (Imran Hussain) and for Belfast South (Claire Hanna).

The cut to universal credit is just one part of a triple hammer blow on families across the country, when coupled with the council tax rise of 5% and the pay freeze for many key workers. While today we have rightly been focused on the immediate threat to the incomes of 6 million families, we should not forget that those on legacy benefits, including the 1.9 million people claiming either form of employment and support allowance and the 300,000 people claiming either form of jobseeker’s allowance, of course have not received an uplift. Those payments must be uprated in line with those for universal credit.

Those on the Government Benches opposed support for families against support for jobseekers, but their choice to cut universal credit is a political one. The past year has seen the Government spend £22 billion on an outsourced test and trace system that still is not delivering. A quarter of that cost has been estimated as the cost for a continuation for a whole year of the support for families that we are debating today. This comes from a Government who have spent monumental amounts wastefully on goods and services that simply have not worked: £150 million on face masks that could not be used; £16 million on antibody tests that did not work; and £12 million on an app that had to be scrapped. The list goes on and on, as intimated by my hon. Friend the Member for Ilford South (Sam Tarry).

Instead of tackling waste and mismanagement, our Government are targeting families, with the worst-off fifth of households in our country facing what the Resolution Foundation has described as an “almost unimaginable” 7% hit to their disposable incomes if the Government continue on this path. Cutting £20 a week from universal credit is a political choice to make ordinary families carry the can for this Government’s mistakes, as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones) rightly put it.

There are rumours that the Chancellor is considering a one-off payment of either £500 or £1,000 instead of maintaining the £20 per week uplift. If those payments take place at the beginning of April, people would miss out if they were affected by the end of the furlough scheme in April, so if someone loses their job on 30 March, they would get £1,000 more to see them through than if they lose their job just a month later. There can be no economic justification for this approach. Furthermore, at times during this pandemic we have had 200,000 new claimants coming on to this system in a single month. A one-off payment simply will not work.

I want to make it clear that I and the Opposition have no truck with those who abuse Government Members for their opinions or threaten them. We wholeheartedly condemn that behaviour and it has no place in our democracy, as my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) made crystal clear.

The Prime Minister’s spokesperson described our debate as a “political stunt”, and other Members on the Government Benches echoed him. However, when the Conservative party was in opposition, it did not consider debates such as these as stunts, and nor did the then Labour Government. My right hon. Friend the Member for East Ham (Stephen Timms), in one of many exceptional speeches today, put his finger on the problem: the Government have lost the capacity to listen. They need to ask themselves why a number of their own Members, from the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) to the hon. Member for Barrow and Furness (Simon Fell), called again today for the Government to look at the issue and to retain the uplift during this crisis.

The Resolution Foundation has shown how the cut, combined with rising unemployment, would lead to the biggest year-on-year rise in poverty rates since the 1980s, and to a rise in absolute, as well as relative, poverty. My hon. Friends the Members for Denton and Reddish (Andrew Gwynne) and for Oldham East and Saddleworth (Debbie Abrahams) rightly highlighted the impact of that on child poverty in particular. The cut is morally untenable, but it is also economically nonsensical. What the UK needs as we come out of this crisis is confidence—confidence that the Government have got a grip on public health, but also confidence that people can afford to spend, to go out on to our high streets and into our small businesses. This cut shatters the confidence of those who are far more likely to spend than those who are better off. The cut also ignores the high long-term costs of poverty, as underlined by my hon. Friend the Member for Wirral South (Alison McGovern). As my right hon. Friend the Member for East Ham highlighted, this is a false economy.

Finally, I regret that I have to mention this, but yet again we saw Conservative Members pitting universal credit claimants against working people. Universal credit is an in-work benefit. It does not take money from everybody else who works, as the hon. Member for Bexhill and Battle (Huw Merriman) suggested, and it should not be pitted against getting Britain back to work, as the Under-Secretary of State for Work and Pensions and the hon. Members for Derbyshire Dales (Miss Dines) and for Stourbridge (Suzanne Webb) maintained. My hon. Friends the Members for Edmonton (Kate Osamor) and for Easington (Grahame Morris) were absolutely right to point to the impact on claimants of such false comparisons.

The proposed cuts will disproportionately impact those in the north of England and in Wales. It is bad enough that one in five non-pensioner households in the south-east will be hit by these cuts, but in the north-east, Yorkshire and the Humber, Wales and the west midlands it will be more than one in three households. The Chancellor might want to learn the lessons of his predecessor. George Osborne also thought he could cut an average of £1,000 a year from families’ incomes. It took just over a month for him to see the error of his ways and back down. Mr Osborne’s cuts would have affected 3.3 million working families. The current Chancellor plans to take a hammer blow to nearly double that number—6 million families—across the country. Month after month, he has stubbornly ploughed ahead, ignoring the economic evidence, even ignoring two former Conservative Secretaries of State for Work and Pensions.

The Minister stated in opening that the Secretary of State was in active discussions with the Treasury. On the Labour side, our DWP and Treasury teams have already had those active discussions. We decided to prioritise families and our economic recovery, and we are doing something about it today. For all the talk of wanting to address inequality in this country, here is a policy choice from the Conservatives that would see one in four people—and one in three children—in relative poverty by the end of this Parliament. Instead, our Government should be focused on securing our economy, protecting our NHS and rebuilding Britain. Cutting a financial lifeline for 6 million people will not secure our economy. Enacting a policy that will plunge families into hardship, widen regional inequalities and make working people carry the can for the Government’s mistakes is no way to rebuild Britain. It is not too late for Government Members to do the right thing. I urge them to vote with us today and send a clear message to millions of families that their elected representatives hear them and are on their side.