Universal Credit and Working Tax Credits

Catherine McKinnell Excerpts

Wednesday 15th September 2021 Commons Chamber

[Jonathan Reynolds]

Absolutely. That investment in people is essential, and this uplift that we are talking about today cannot be considered without remembering the benefits freeze that lasted for four years prior to 2020. As the former Secretary of State, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), has said, the uplift only really restored what the value of UC would and should have been.

The pandemic exposed what many of us already knew: that social security in this country had become so threadbare it simply would not have got us through the pandemic. Since 2010 there has been unprecedented growth in in-work poverty in the UK, and food banks have become the norm in every town and city. No constituency has been exempt from that, and, most of all, one in eight working people in the UK is currently living in poverty. So the Government should not be seeking to congratulate themselves on making this uplift during the pandemic; they should ask themselves why they let things get so bad to begin with.

There was another laughable moment in Question Time on Monday when the Secretary of State compared the Government’s response to that of the Labour Government after the global financial crisis. Back in 2008 there was a functioning and supportive welfare state: tax credits acted as a superb automatic stabiliser; Jobcentre Plus had already been created, bringing together the old social security offices with the jobcentres, which all Governments since have recognised as a huge strength; unemployment did not hit 3 million, as initially predicted; and initiatives such as the future jobs fund played their role. So that Government had already done the hard work back then, and that is the lesson this Government need to learn.

As many Members have said, great as the impact on families is, we also have a responsibility to consider the impact of this on the country as a whole. The money we are talking about is spent in local shops and on local services, the very businesses that have had such a tough time because of the necessary public health restrictions most of us here backed for good reasons.

The recovery is promising, but it is not a done deal and there is a lot of ground to make up. This is the wrong decision for the economy and it also fails to learn the lessons from the pandemic and build the resilience we need as a country to face future challenges.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I absolutely support everything my hon. Friend is saying in his speech, and the Government should listen hard, because we have all lived through a very difficult 18 months and there are increasingly difficult times ahead as well. We have learned many lessons during this period, such as that we should invest more in the things we value most. This money is targeted at families; 40% of families with children in my constituency will lose out as a result of this decision, and that will have an impact on those children. We have one of the most expensive childcare systems in the world and we know that working families are struggling. The Government can do something simple to support those families by changing their direction on this cut today.

[Jonathan Reynolds]

My hon. Friend is right. The lever the Government have to alleviate this basket of problems—childcare costs, fuel costs, food costs—is to not go ahead with this decision.

My hon. Friend’s intervention brings me to my next point. If it really is the Government’s ambition to level up the UK, it is hard to see how that can mean anything when this cut disproportionately affects the places the Government say they want to boost. Despite all the rhetoric, this cut will take £2.5 billon out of local economies in the north and the midlands, including Stoke-on-Trent which would lose over £32 million and Blackpool which would see £23 million cut.

We all know this money is not being invested or hidden away; it is being spent. It is being spent in shops and restaurants in local high streets that desperately need a boost after last year. After the last week, it seems that the Government are keener on taxes up than levelling up.