Tax Credits: Impact of Cuts

Baroness Hollis of Heigham Excerpts

Monday 14th September 2015 Lords Chamber

[Lord Ashton of Hyde]

My Lords, I did not know that they had risen that fast. The former Chancellor, Alistair Darling, said that tax credits were never intended to subsidise lower wages. However, the current Chancellor has been very careful not to claim that tax credits have depressed wages. The fact is that we want to increase people’s wages. We introduced the national living wage and we want people to keep more of what they earn, rather than subsidising people through the benefits system.

[Baroness Hollis of Heigham (Lab)]

My Lords, is the Minister aware that, despite his statistics, the majority of children in poverty have parents in work? It is therefore not true to say that work is the best route out of poverty unless that pay is topped up by tax credits. Otherwise, a single person and a family get the same wage. Tax credits lift children out of poverty. Can we therefore hope that the Minister will take that information back to the Treasury so that, when we face the battle over welfare reform cuts, alleviating child poverty is at the heart of this House’s attack on poverty?

[Lord Ashton of Hyde]

The noble Baroness is well respected for her mastery of the detail in this reform. We will address child poverty comprehensively in the Welfare Reform and Work Bill. I am sure that the noble Baroness will be involved in that. We still think that work is the best route out of poverty. The number of children growing up in workless families is at a record low, down by 390,000 in the last Parliament. We are particularly trying to help those on the lowest incomes. Families will still be able to earn up to £3,850 before the awards are taken away.