Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015

Baroness O'Loan Excerpts

Monday 26th October 2015 Lords Chamber

[The Lord Bishop of Southwark]

My Lords, I support the amendment to the Motion as tabled by the right reverend Prelate the Lord Bishop of Portsmouth, in the hope that it will indeed give space for further reflection and reconsideration of the tax credit proposals. I believe that it has the potential to do that.

First, I want to record my appreciation for the welcome rhetoric in recent months from members of the Government saying that employment, not least hard work, merits fair pay and some recognition in the national minimum wage. It is this, rather than buttressing from the state, that should provide the income of working people. It follows from this that rising wages and salaries will, of their own accord, not least from the Government’s own national living wage proposals, reduce the use of tax credits in due course without the introduction of the draft regulations before us.

The diocese which it is my calling and privilege to serve covers most of south London and east Surrey—I have the honour of several of your Lordships living within it. It is a large and populous area, encompassing significant pockets of urban deprivation alongside considerable wealth. The unsustainable cost pressures in the property rental market, as well as rapidly rising house prices, already threaten the balance of many communities. I fear that the introduction of these regulations will push a significant number of hard-working although low-earning families to breaking point. A reduction in the threshold for families’ earnings before credits are withdrawn from £6,420 to £3,850 is a very dramatic change, which will adversely affect all but the poorest members of the communities we serve. Families that strive, struggle, aspire and hope to advance their well-being will be thrown back, since few have the sort of margin between income and expenditure to cushion them from the blow that is coming. In the London Borough of Southwark alone, whose 50th anniversary was commemorated in my cathedral this past weekend, it is estimated that some 20,000 families are in receipt of tax credits and, further, that even making allowance for the mitigating factors being introduced by the Government, some 4,000 will remain worse off by these changes. That is in just one London borough.

The sort of wage rises that would mitigate this and the extra hours worked to catch up will be taken away by the loss in other benefits, even if there were enough hours in the day. The rise in personal allowances which benefits a far wider group of people, including Members in this Chamber, will not compensate for this shortfall. By these regulations, we are in fact asking parents to make their children bear a significant adjustment in their economic circumstances—an adjustment that some children will not understand, which in itself will be an added stress to their families. We risk stripping our fellow citizens of their dignity by these provisions, even though the Government’s stated intention with a whole range of economic and fiscal measures is to do the opposite. We should take this opportunity to counsel Her Majesty’s Government not to seek to add to the burdens of those working hard for their families, and to reconsider in detail the impact of these regulations and the need for more fully worked-out transitional arrangements. I therefore support the regret Motion as tabled by the right reverend Prelate.

[Baroness O'Loan (CB)]

Before right reverend Prelate sits down, could I just ask him why, if he believes that this will cause such difficulty, harm and distress to so many children and their parents in our community, he is telling us to vote for this Motion?

[The Lord Bishop of Southwark]

I was persuaded by listening to the noble Lord, Lord Butler of Brockwell, explaining the other day the constitutional differences that exist between the two Chambers .

--- Later in debate ---

[Earl Howe]

—the traditionally worded fatal amendment is that in the name of the noble Baroness, Lady Manzoor. I am sure that the noble Baroness, Lady Hollis, got good advice—the best advice there is—but what we are looking at is what would happen if her amendment were carried. I am saying that it would frustrate the Government’s intent.

[Baroness O’Loan]

Does the Minister think that it would be impossible, if either of these two amendments were passed, for the Government to bring back regulations in the form of a statutory instrument to this House?