Tax Credits

Bob Blackman Excerpts

Thursday 29th October 2015 Commons Chamber

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to follow that thoughtful contribution from the hon. Member for Arfon (Hywel Williams). I, too, congratulate the right hon. Member for Birkenhead (Frank Field) on securing this debate, and the Backbench Business Committee on its wisdom in granting it—I had the pleasure of chairing that meeting. This is the first opportunity I have had to contribute to a debate on the vexed issue of tax credits.

It is a great shame that the right hon. Member for Birkenhead was unable to convince his party when it was in government of the wisdom of transforming the welfare system in this country, but we are where we are. My big criticism of the previous Labour Government is that instead of reforming the welfare system, every time a new problem arose they set up a new benefit. The system therefore became unwieldy and unworkable. When I was elected in 2010, a series of people came to see me about the hugely complicated financial arrangements they faced, both with working tax credits and child-based tax credits.

[Mr MacNeil]

The hon. Gentleman says that when the previous Labour Government had a problem they increased tax credits. The real problem is low wages. This Government are weakening trade unions and undermining the right to collective bargaining, which is what allows workers to strive for higher wages, and that will not help the situation at all.

[Bob Blackman]

That is not quite what I said. I mentioned the welfare system and said that we had a series of different welfare benefits. Whatever the problem was, the Labour Government set up a new benefit, whether a tax credit or another arrangement. During a period of relatively high employment they failed to deal with the fundamental issue, which, as the hon. Gentleman rightly points out, is low wages.

This debate was billed as the last chance to review what the Government are proposing before it became fact, but events in the other place mean that we are now in a position to make alternative proposals. Contributions this afternoon will therefore be helpful to the Chancellor in deciding what to bring forward in his autumn statement. Clearly, we have to strike a balance. The Conservative party manifesto laid out that we were going to save £12 billion in welfare. The challenge is therefore to come forward with alternative proposals on how welfare savings of £12 billion will be found. Some £4 billion of savings are envisaged from this change.

I start with sympathy for the people affected. When we reduce people’s benefits, they will always complain. When we increase the tax threshold so that they pay less tax, they will be quite happy and will not complain. When their wages are increased, they will not complain. But if we take benefits away, they will squeal. We clearly must look at the effect on individuals in the round. We must have the utmost sympathy for those people who are working full time and have no alternative but to receive tax credits to top up their wages. What can they do? They suffer a loss of income, and that will have an impact on their families. Therefore, the first thing I would like the Chancellor to do is examine the measures so that people in full-time work suffer no impact whatsoever, because this is grossly unfair on them.

Equally, we face a challenge in both the public and private sectors. Over time the Government have quite rightly reduced business taxation to encourage businesses to grow and to locate within the United Kingdom. That has got to be good news, because it has created jobs. However, they have also kept wages artificially low, and that has to change. Therefore, I greatly support the principle of a living wage, but clearly it is far too low at the moment. We need to see it increase dramatically so that work pays, instead of relying on the taxpayer to subsidise work in private industry, which cannot be right. I hope that the Government will look at that, in particular, so that we can encourage businesses to pay their staff more for the work they do. That has to be the right way to demonstrate that work should always pay.

We hear constant criticism from the Labour party about the creation of large numbers of part-time jobs in this country. One of the reasons for that is the fact that a large number of people know that if they take on a part-time job, perhaps working 16 hours a week, they will still have access to a large range of benefits. That is a lifestyle choice.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Will the hon. Gentleman give way?

[Bob Blackman]

I will not give way again.

That is a lifestyle choice that people make. What we can see is that Government proposals and Government restrictions on taxation and benefits change people’s habits, so what we have to do is enable people—

[Marie Rimmer (St Helens South and Whiston) (Lab)]

Will the hon. Gentleman give way?

[Bob Blackman]

I am not giving way again.

What we need to do is look at how people can change their behaviours to make sure their income is increased. The first area we have to look at is childcare. Working mothers and fathers who have childcare responsibilities need access to proper, decent childcare. I applaud the Government for the 30 hours’ free childcare, but that is not good enough for parents who, as a result, can only work part time. Please will the Government consider improving the amount of free childcare given—not the limited range we are discussing now, but more extensively—so that more people in this country can choose to take on more hours at work, and therefore improve their income at no cost to themselves? That would reduce the tax credits bill and ensure greater productivity in our industry.

Those two measures would start to alleviate the problem, but I believe that the Government, now in listening mode, need to consider where else we can save money in the welfare system. There is also a challenge for the Opposition: if they do not agree with reducing tax credits, from where else within the welfare system should the money come? That is a clear challenge, and I look forward to hearing in the winding-up speeches some of the answers to some of the questions raised in the debate.

The reality, and my greatest concern, is my constituents’ uncertainty about how they will be affected next April if the changes are introduced. As the right hon. Member for Don Valley (Caroline Flint) said, one of the problems is that people are making lifestyle choices now. It is not fair to those families and individuals who are thinking about what they should do in terms of work, where they study and so on to leave them in limbo. The quicker this is resolved, the better for everyone concerned.