Capping Welfare Spending

Charlie Elphicke Excerpts

Wednesday 10th July 2013 Westminster Hall

[Charlie Elphicke (Dover) (Con)]

I am delighted to have secured the debate. The level of welfare spending and whether it should be capped have been the subject of great public interest but have not been discussed much in Parliament, so this is a good opportunity to give the issue a short airing.

Even before the crash, the cost of welfare spending rose by 50% under the previous Government. All sides agree that when the good times rolled, too little action was taken, in the famous words of the Chancellor, to fix the roof while the sun was shining. The current Government have had little choice but to take necessary but tough decisions. We must live within our means, and welfare reform and capping welfare are key parts of that. It is a question of fairness. In my constituency and up and down the land, people go out, work hard and try to do the right thing for their families, spouses, children and loved ones, to make ends meet in difficult times. They look around and they tell me, “It’s simply not fair that there are people living on benefits who are better off than we are. Why do we go out to work? Why do we bother? Why not just live a life on benefits and be better off?” It is wrong that people who do not work enjoy a higher standard of living than people who go out to work and do the best they can.

[Gavin Barwell (Croydon Central) (Con)]

Does my hon. Friend agree that the vast majority of those who are on benefit do not choose to live that lifestyle, but the previous Government designed a system that traps them, because they receive more in benefits than they are ever likely to get through work? The system traps people in that condition.

[Charlie Elphicke]

I completely agree with the powerful point that my hon. Friend makes. The number of households in which no member has ever worked doubled under the previous Government. As he says, we cannot stand by and allow social failure on such a grand scale to continue for a moment longer. That is why no family who are out of work should be better off on benefits; why a benefit cap is right; and why it is set at £26,000 a year.

[Julian Smith (Skipton and Ripon) (Con)]

Does my hon. Friend agree that, from the perspective of a Yorkshire MP or an MP from another part of the country, the benefit cap could be much lower in certain areas, which would be much fairer to working people in those areas?

[Charlie Elphicke]

My hon. Friend makes an interesting point, which is certainly a topic for debate, so I hope that the Minister will address it when he responds. The Government have sent a positive social signal that work is a force for social good. Capping the amount of benefit that any one family can receive is right and has been met with great approval in my constituency. My constituents raised the issue time and again.

[Mr Jim Cunningham (Coventry South) (Lab)]

I thank the hon. Gentleman for securing the debate and for giving way. At the beginning of his speech, he mentioned that the current Government had inherited debt from the previous Government. I remind him that after 18 years of the Conservative party being in power, that previous Labour Government found in ’97 that, for every pound levied in tax, 50p went to pay off debt. They eliminated a lot of inherited debt, but that is not my main point. When I was a Member under previous Conservative Governments, people were trapped in housing estates. The hon. Gentleman wants to call it the system that we inherited or whatever, but whatever system we bring in, there are going to be people trapped in certain estates—they used to be called Thatcher’s children.

[Charlie Elphicke]

I thank the hon. Gentleman for that interesting intervention, but I cannot agree with him. When the current Government came to office, the interest bill was the same as the entire education budget—I think that I am right in saying that. It was a very substantial amount. That is not a great showcase for fine administration of the public finances. It is well understood that the country’s debt was entirely out of control. I take his important point about social mobility and helping people to get out of the traps of poverty. Universal credit will make work pay, incentivise work and encourage people to do well, and that lies at the heart of much what the Government are doing. I approve of that approach. We need to build in incentives, by on the one hand limiting the amount of benefit and on the other hand encouraging work and making it pay.

[Penny Mordaunt (Portsmouth North) (Con)]

For too long, people in my constituency who were out of work for considerable periods, because they had challenges that needed to be overcome, did not get the proper, expensive advice and support that they needed to get back into the workplace or into it for the first time. Does my hon. Friend agree that in these difficult times, with a limited pot of money, we are better off spending money on top-quality advice, rather than increasing the welfare budget?

[Charlie Elphicke]

Absolutely, and a lot of Government policy has been about that. The Work programme is a key part of giving people the tools, education and support to get back into the world of work and understand the rhythm of a working day.

[Glyn Davies (Montgomeryshire) (Con)]

I thank my hon. Friend for taking my intervention. The Government are trying to ensure that the whole welfare system is perceived as fair. In a very low-pay constituency such as mine, the vast majority of people believe that the welfare cap is crucial if the system is to be fair and seen to be fair.

[Charlie Elphicke]

Absolutely. The system needs to be fair, and I hope that in his response Minister will address the important issue my hon. Friend raises.

The average pay packet has not increased much in recent years. The recession was serious and the recovery has been long, hard and extremely choppy, so it is right that welfare benefits should not increase faster than pay packets. It is unfair that benefits have risen twice as fast as average earnings since the financial crisis, which is why the Government are right to introduce a 1% uprating limit. My constituents have told me that that is an important signal about fairness and the fact that work is good. The Government are also right to make work pay, with universal credit and by increasing the income tax personal allowance. At the same time, the Government have sought to be fair and protect the most vulnerable—the disabled, the elderly and the incapacitated.

Benefit capping is about not only fairness, but money. We should remember the country’s debt crisis. Savings of £4.4 billion by 2017 are not trivial, so it is small wonder that more than 60% of people have told pollsters that they support the Government’s measures to restore fairness on benefit uprating. The Government have been prepared to make the most difficult decisions—I will not shirk that issue. Capping housing benefit, so that it is most aligned to housing need, has not been easy. It was a difficult decision. People do want to be told that they will have to pay more for their spare room, but that cap is also about fairness, which is why a clear majority of people tell pollsters that they support the difficult decisions that the Government have taken. There are 1.8 million households on the housing waiting list and 249,000 households live in overcrowded social housing, yet 386,000 households in the social sector are under-occupied. It is important that we take measures to restore the balance, so capping housing benefit is right and fair.

I would like to press the Minister slightly. Will he consider extending the principle of tackling the spare room subsidy, so that the social housing provider takes the burden? I am concerned that too many social housing providers think that they can simply pass the buck when it comes to managing their housing stock fairly and appropriately and making fair allocations. The spare room does not affect them, so why should they care? Too often, they are content to do little or nothing about fair housing allocation. The best incentive to get them to clean up their acts would be for social housing providers to take some or all of the burden for their incompetence in the management of housing allocations over such a long time. I hope that the Minister will consider that proposal, because it is right to send a strong message to social housing providers that indolence in housing management is not an excuse.

[Jonathan Lord (Woking) (Con)]

I congratulate my hon. Friend on securing this important debate. Would he particularly welcome the fact that, as of today, 2,500 out-of-work households in London can no longer claim more than the average working family earns? In London, where I was a senior councillor for several years, we have seen some particularly egregious cases of people in houses with equivalent rents of more than £100,000. I agree that that involved a few isolated cases, but it was a real slap in the face for hardworking people in London trying to get by on £10,000, £15,000 or even £20,000. A bit like with Abu Qatada and the human rights law, it crystallised for so many people the inequity and unfairness of things.

[Charlie Elphicke]

I completely agree with my hon. Friend. He made that same good point earlier today, in questions to the Prime Minister if I recall rightly. It is a serious point. We need to get a balance of fairness.

If we want to know whether people are affected, we need just to look at the local authority discretionary payments budget. Members can correct me if I am wrong—I am sure that the Minister will—but I believe that the budget has been under-spent, which indicates that the impact has perhaps been understated by some for political purposes, rather than their dealing with the practical effects of restoring fairness. Most of my constituents say, “It’s just not acceptable that anyone should have something for nothing, given the difficult times we live in.”

The Government have raised the issue of the overall cap, which is something I welcome strongly. It needs to be a serious cap, not the sort of nonsense that we have been hearing from the shadow Secretary of State for Work and Pensions. He does not seem able to say what his cap would be or how he would set it. Labour cannot say what would happen if the cap was breached; all the party seems able to say is that it wants to include the state pension and pensioners in it. We need to limit welfare spending, but it is not right to do it at the expenses of pensioners who have worked hard for so many years and have contributed to the system. It would not be right for any Government to start beating pensioners up and taking their pensions away, considering how much they have put into the system, so Labour is wrong on that. The party is in a total muddle and confusion. It has opposed each of our welfare reforms, which have saved some £83 billion.

When might the Minister be able to set out further details of the Government’s plan for how the welfare cap will work? Labour’s proposals are muddled and confused, and it is right that the Government should take time to get the fine detail of the plan right, rather than shooting from the hip like Labour. Does the Minister agree that it is important to limit the cost of welfare and to build on the measures that the Government are taking to do more to make work pay? I ask him to confirm that this Government will not punish pensioners for having done the right thing in years past by contributing to the system and will not take away or limit the state pension, as the Opposition seem to plan to do.

With your leave, Mr Rosindell, I will end there and allow my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) to take up the cudgels.