(10 years, 4 months ago)
Commons ChamberSmall businesses do not tend to pay so much in corporation tax. That is not the main burden they suffer—that is the burden of business rates and payroll taxes. Will the hon. Lady therefore join me in welcoming the action that the Government have taken on business rates and payroll taxes, which will really help small businesses?
I am glad that the hon. Gentleman is interested in business rates, the subject we are discussing. Our suggestion is that in order to make a real difference to those businesses, we can go far further in the way we deal with business rates.
Rather dramatic statements are made that a suggested change of 1% in the rate of corporation tax will result in companies—on the basis of that alone—changing their plans, leaving the country or not coming here. These statements are made but it is not clear whether there is evidence for them. The impact of the 21% to 20% change in corporation tax is not—or so it would appear in the initial period at least, according to the OBR report—to increase take from corporation tax, but to decrease it.
(11 years, 9 months ago)
Commons ChamberIt is a real pleasure to follow a maiden speech, particularly that of the hon. Member for Cardiff South and Penarth (Stephen Doughty), whom I congratulate on his excellent speech. He has a hard act to follow, as he acknowledged, having had two illustrious predecessors: “Sunny” Jim Callaghan and Alun Michael, late of this House. We will all watch his career with interest to see whether the constituency can provide a trio of senior Cabinet Ministers in due course. I must warn him, however, that no one ever tells us before we come to this place how busy it is and how hard-worked we are. I hope that he will still find the time to go and see Cardiff City play, and to pursue his singing hobby, which I understand he is partial to.
Moving on to the matter of income tax, I believe that the right policy is one of fair taxes, not only in regard to the higher rates but across the piece. For me, that means taking the poorest out of tax altogether, as well as taking the middle classes out of the higher rate and not allowing them to be consumed by fiscal drag as they have been over the past decade. It also means avoiding punitive rates that drive people out of the United Kingdom altogether, and ensuring that multinationals pay their fair share of tax on their UK revenues. Putting all that together would create the system of fair taxes and tax justice that this country urgently requires.
Did Labour do any of those things when it was in office? It did not do much to take the poorest out of tax. Indeed, many of the comments from the Opposition today on our policy of increasing the personal rate to £10,000, which I hope to see, have been mealy-mouthed at best. They appear at times even to oppose it.
Does the hon. Gentleman accept that there are different ways of assisting those on lower wages? The Institute for Fiscal Studies has suggested that tax credits are more efficient than raising the tax threshold, which is very expensive. Furthermore, once people have fallen below the threshold and out of tax, they get no further help. It is at least arguable that the Government’s much-vaunted raising of the personal allowance will not help the poorest families, and that it will come at a very high price.
I prefer aspiration to the welfare dependency that Labour has offered over the past decade.
We have cut income tax for 25 million people in this country, and we are taking 2 million people out of tax altogether. I am proud that this Government have done that. We are increasing the personal allowance to £9,205 in April 2013, and I want to see it increased to £10,000 in due course. These are real achievements for the Government. It was wrong that the previous Government allowed so many people on middling incomes to get stuck in the 40p rate, where they should not have been. I hope that, as the public finances recover, we will be able to find more space to take middle-earning people out of the higher rate. They are not rich people; they are the people in the squeezed middle created by Labour when it was in power, and I hope that that situation will change over time.
The most important thing is to look at the effects of the punitive rates that Labour introduced. Let us face the facts. Today’s Daily Mail reports that about two thirds of Britain’s highest earners “deserted the UK” after the 50p top rate of tax was introduced. It found that in 2009-10 some 16,000 workers with an income of over a million quid paid tax, but that the number then dropped to 6,000 after the former Prime Minister brought in new tax rules.
I would like to congratulate my hon. Friend the Member for West Worcestershire (Harriett Baldwin) on asking the questions that drew forward these important figures. The tax paid by top earners fell from £13.4 billion to just £6.5 billion in 2010-11. That is the issue, is it not? If the rate is increased so much that it becomes punitive, people will leave the country, squirrel away their income, not declare their income, leave it in companies—personal service companies—or cash boxes where it is not subject to tax. When that happens, tax revenue is lost.
On that basis, I am sure that the hon. Gentleman will jump up next to say that he is in favour of hanging, along with most of the British people. I do not see him or his Labour colleagues supporting that particular measure—or, indeed, a measure to leave the European Union, which is what most people in this country say they want when they are polled. I urge the hon. Gentleman to be cautious when it comes to these issues; he needs to be careful about what he wishes for.
I think that the Treasury is right to cut the 50p rate to a more sustainable level. We know it will cost £100 million, but we also know that five times that amount has been raised by taxes that are less elastic. This measure is right for the public finances and it is the right economic policy to encourage growth and prosperity in this country. It is also the case that if we cut the rate, we up the take; and I suspect the Treasury figures might turn out to be a little bit better—or perhaps it has been a little more cautious—than we think. I suspect that we might well end up with more money in the bank as a result of these measures.
Broadly, what the Government have done is right. It is important to remember that if we encourage millionaires to stay in Britain and to set up and run businesses here, they will do so far more effectively. It is important, too, for the Government to look at multinationals and ensure that they pay a fair share. We should also note that in the past decade, the Labour Government allowed multinationals to flout our tax law and not pay a fair share of tax. The reason we are talking about the super-rich—Apple, Amazon, Google and all the rest of these large combines—today is that the Labour Government let them completely off the hook. They were so determined to be the pro-business party that they did not collect the revenue from these companies that they should have done. They did not keep our tax law up to date for the internet age.
The Opposition may well want to talk about millionaires and the people who earn amounts that lead to the 50p rate, but it is wrong for them to do so while they completely let off the hook the really large businesses that have substantial revenues that they could and should pay in the UK but do not. Shame on them for that. Let us face the fact that the working nation under Labour saw income taxes rise by about 80%, whereas non-oil corporation tax revenues went up by just 6%. I do not think that is a record of which the Labour party should be proud; it is not a good record or a justifiable record, and people are very angry about the fact that Labour was completely asleep at the wheel on that score.
I think the Government took the right measure in dealing with tax avoidance by the super-rich. It is not just about the 50p income tax rate, as it is also about tackling tax avoidance. An important consultation on tax avoidance is taking place, along with the introduction of the general anti-abuse rule. It is important, too, that we are raising more money from less elastic taxes as a result of getting rid of the 50p rate. We have a package of measures, such as stamp duty land tax, cracking down on tax avoidance and introducing a cap on uncapped income tax reliefs. Reducing the 50p rate for millionaires is not the right way to approach these things; the right thing to do is to look at the inelastic taxes.
It is very revealing that we have seen interventions by Labour Members today attacking the measures on stamp duty land tax, implying that they are almost the wrong thing to do. It is important to go for the less elastic taxes and use the elastic taxes to encourage entrepreneurs, wealth creators and those who will create jobs and money. It is important, too, that the figures in the Office for Budget Responsibility report and from Her Majesty’s Custom and Excise show that the 50p rate raised next to nothing. Analysis showed that the 50p rate meant £16 billion to £18 billion of income was deliberately shifted into the tax year before it was introduced.
I have already given way.
Self-assessment receipts for 2011-12 are below the forecast by £3.6 billion and the increase from the 40p to the 50p rate raised only a third of the £3 billion that the Labour Government said it would raise. It is easy for Labour to say, “Ah, but eventually this money will pop up”—but not necessarily. The money could be kept in a personal service company, as so many Labour Members and, indeed, the former Labour Mayor of London have done, and lent to oneself with a beneficial loan, helping to avoid paying tax. People can take those sorts of measures, or they can capitalise their income and invest it in something else, meaning that the money never comes into charge. That is why super-high rates are unwise. It also means driving people abroad. That is exactly what happened: people were driven abroad by the Labour Government’s penal tax rates. Again, that is not the right thing to do. We need to look at how to repair our nation’s finances, not look at how to play politics with the politics of envy.
It is important to remember that the former Chancellor of the Exchequer said that the 50p rate was always meant to be temporary and that the Revenue has been very effective in cracking down on tax avoidance, which is where the really big numbers lie. The 50p rate does not raise a whole of lot of money and it discourages a whole load of people by sending out a negative message on the competitiveness of Britain, while the tax avoidance and evasion yield has jumped to a record £21 billion. It is important to crack down on all those tax avoiders and tax evaders, making sure that they pay a fair share.
Finally, I would like to quote what the OECD says about the effect of the 50p rate on our competitiveness and on our economy. Back in July 2010, it said:
“Consider reducing the top rate of PIT”—
personal income tax—
“which is substantially above the OECD average and likely adversely to affect work incentives and entrepreneurship, particularly of high skilled workers. Consideration should be given to reducing the top rate of personal income tax to close to 40 per cent”.
It is very telling that an international organisation is saying that a country’s tax system is going to drive people away, particularly the high skilled, highly able, highly job-creating, highly entrepreneurial people that a country most needs to have. The Government have been very brave in putting the economics before the politics in the last Budget. I commend them for what they have done and for taking the tough decisions that are right for our economy.
(12 years, 1 month ago)
Commons ChamberIt is a pleasure to follow the shadow Minister, who has set out such a partial view from the Labour party’s perspective on this Budget. I think there is a better approach: the more people we take out of tax, the better, as the administration cost is less and there is less hassle for people, particularly the least well-off. I want to see the personal allowance increased to £10,000 as soon as possible. Good progress was made in the last Budget, but the sooner we take the number to £10,000, by far and away the better. Nevertheless, I welcome the fact that most basic rate taxpayers will see an annual cash gain of £220, and I welcome the fact that this Budget takes 2 million people out of tax altogether. That is important, particularly given that we all remember the fiasco over the 10p tax rate. The more we can look after the least well-off and take them out of the tax system, by far and away the better.
I was fascinated by the whole discussion about the 50p rate. We can see from Treasury figures that we are talking about £100 million. That figure is rubbished by the Labour party, which thinks the figure is completely wrong and cites an IFS report. Let me quote the relevant passage from the IFS report, which is where I think the Labour party draws its approach from. The IFS states:
“The worry for the Chancellor is that the estimate that cutting the top rate to 45% will only cost £100 million is particularly uncertain. It assumes a ‘no behaviour change’ cost of £3 billion offset by a behavioural change of £2.9 billion. The first number we know reasonably accurately; the second number is estimated with great uncertainty. Even if we knew the effect of introducing the 50p rate—which we don’t with any precision—responses may not be symmetric. Those who have got a taste for avoiding the 50p rate may continue to avoid the 45p rate (even if they wouldn’t have done so had the 50p rate never existed). The experiment with the 50p rate does not appear to have gone well.”
My first conclusion is that the IFS is saying that making the rate 50p in the first place was a complete and utter disaster. The second issue raised is the uncertainty over behavioural change. On that, I say that we have empirical evidence on what happens when the rate is reduced. I do not know whether everyone recalls this, but we used to have an income tax rate of about 80%. When that was reduced, first to 60%, there were great cries from the Labour party that it would cause a collapse in the revenues, but instead the revenues rose. Why was that? It was because fewer people avoided tax. The Government of the day then reduced the rate to 40p. Again there were great cries from the Labour party that that would let the rich off the hook, but what happened? The revenues rose. Why was that? It was because fewer people were as interested in avoiding tax and they paid up a fair share.
There are other explanations for the increased tax take during the period in question. One was the general growth in the economy, which generated more income, whereas another was the greater degree of inequalities, which meant that although people were paying a lower rate of tax, the cash take was higher because their income had risen so much. People on very high incomes are still paying a relatively low rate of tax, however. If tax avoidance did not take place previously, why have there been so many examples of it?
I ask the hon. Gentleman to correct the impression he gave. The age-related tax allowance does not go to the very richest pensioners; it is the group in the middle who are being squeezed by the proposal.
The age-related tax allowances only kick in to benefit those pensioners who have a substantial income, or a more substantial income, in retirement. We are not talking about the very least well-off pensioners who are affected by grinding poverty, but about pensioners who are better off and who have savings and income. As I said, there are no cash losers and they have had a massive benefit from the pensions triple lock.
(12 years, 4 months ago)
Commons ChamberI think it is important to see this in the context of the cut in the 50p rate.
I am also concerned about some of the attempts today to counterpose and, as usual, level down. It is fascinating. We heard earlier that if we were going to increase the allowances for young people and working people, it was not fair that older people who were already retired should have a higher threshold. Why do the Government always want to level down? Why do they feel, essentially, that they have to pit one group against another rather than saying that the unfairness lies in the high tax levels for working families? Let us not forget that many of those families have not benefited from the rise in the tax threshold because of the changes to tax credits.
Some of the apparently quite small measures that the Government are introducing are illogical. We keep being told that we want people to save and to benefit from savings and work, but yet again this measure undermines that. We have seen that, too, in the way in which working tax credit has been dealt with. We have heard about people with very low working hours who will lose a lot of working tax credit. Working tax credit was frozen, however, and was not increased in line with inflation when benefits were. That totally contradicts the Government’s own policies, because if we want to make work pay rather than benefits, why put up benefits in line with inflation but not working tax credit?
At lot of what is happening is illogical and it is important that we straighten things out and oppose this provision. I shall sit down now so that my hon. Friends can speak.
One key point is missing from this debate, and that is a memory on the part of the Labour party. We have heard a lot of cant from the Opposition and they have shown very little memory of the pensions raid back in 1997, which knocks the issue of age-related allowances into a cocked hat. It should be remembered that there was a £150 billion pension stealth tax at that time. Indeed, Ros Altmann, who was an adviser to Tony Blair, famously said that Labour “destroyed our pensions system”. The numbers involved as regards age-related allowances are small compared with that massive and unjustified smash-and-grab raid on our pension system, which destroyed the private savings culture that had been built up over so many years. Then, considering the insidious introduction of pensions means-testing, which was a massive attack on personal responsibility, it is extraordinary to hear arguments from the Labour party that the measures on age-related allowances somehow take away that personal responsibility, given that it introduced a whole system that systematically wrecked the taking of personal responsibility. We need to hear a bit more humility from the Labour party and a bit more of an apology.
(12 years, 8 months ago)
Commons ChamberI am pleased to be the first to welcome you to the Chair, Madam Deputy Speaker. I want to make a few remarks about economic impacts on the households and families that find it the hardest to make ends meet. Some call them the strivers; some call them hard-pressed families; I have even heard them talked about as alarm-clock Britons. Many families with children find it very hard to make ends meet, so it is worth underlining the strong action that the Government have taken to help people in that position.
First and most important of all is keeping interest rates low. I noted with interest the intervention of the shadow Chancellor on the Chancellor to point out, “Well, there is a liquidity trap; interest rates are too low; it is a bad sign; we need higher interest rates.” I think that that will ring very poorly with Britain as a whole. For people who are striving and finding it hard to make ends meet, having to pay higher mortgage interest is not in their interest. The shadow Chancellor and the Labour party are wrong if they are entertaining a policy that is about raising interest rates. That was my understanding of the drift of the shadow Chancellor’s speech. I regret it; I do not think it is the right thing to do. Let us bear in mind that a 1% hike in interest rates would mean £10 billion more in interest payments—about £1,000 extra on the average mortgage. People are finding it hard to make ends meet because of rising global commodity prices and the current difficult situation. Higher mortgage interest rates would be a massively retrograde step. One of this Government’s most important achievements has been to keep interest rates low by providing stability, clarity and a positive deficit reduction plan to get our finances in order. That is helping millions of families up and down the country and millions of businesses with lower interest rates are far better off than they would be otherwise.
The other really important thing is the help the Government are providing with child care. For a long time it has been difficult, particularly in deprived communities like parts of Dover and Deal in my constituency, for joint working parents to juggle child care. The announcement to help those deprived areas with extra help for child care places was one of the most important in the autumn statement.
At the same time the Government reduced the amount of child care tax credit last year, so far from helping working families, that did exactly the opposite. These provisions for nursery care, though important, are not really a substitute for the kind of costs people face if they want to work.
I thought that child care tax credits had been protected. Indeed, I believe they are going up £135 next year, so I am not sure that the hon. Lady has that right.
Like others who have spoken today, the hon. Gentleman is confusing several different issues. The purpose of child care tax credits is to pay the cost of child care. The Government reduced the proportion of the cost that was paid from 80% to 70%. Child tax credits are a completely different entity, and yes, they are being increased. Earlier, the hon. Member for Bristol West (Stephen Williams) suggested that tax credits had not been frozen, but they have been, and that is another hit suffered by working families. It would help if Government Members understood more about the benefit and tax credit system.
As the hon. Lady well knows, she and I debated the issue at length during the Committee stage of the Welfare Reform Bill. I know that Opposition Members sneer at this, but I think it important that child tax credits are rising by £135 next year. That is a move in the right direction. It is good that the lowest paid in the public sector are being protected from the pay freeze because they are disproportionately women, just as it is good that 1 million people are being taken out of the income tax system because they are disproportionately women. We need more action of that kind. The hon. Lady’s party had 13 years in which to take such action, but, as we know, child poverty sky-rocketed during the last Parliament. At least this Government are trying to take positive action in difficult times.
Hard-working families need to see stable finances, a stable Government and a stable fiscal position, because that is the only way in which we will bring back real growth. If we had continued to pursue the policies of the past, what would have happened to our country? We would have ended up as a basket case, like Greece, Italy, Portugal and Ireland. However, we had a credible plan, and we took firm action to control the deficit and sort out our national finances. We have made tough decisions that hit the least well-off, but also the most well-off. We are all in it together. Everyone is sharing the pain, more or less equally, and I think that that is the right direction of travel for the Government.
Members on the rowdy Opposition Back Bench may not agree with what I am saying, but the figures make it clear to me that we are working to create fairness. For instance, unlike the Opposition, we want to create fairness for motorists. By the end of next year, those who experienced such difficulty as a result of Labour’s fuel duty escalator will save £144 on the cost of filling up the average car by the end of next year. That is an important example of progress. The apprenticeship scheme has also been a real help to our young people after youth unemployment rocketed, particularly under the last Labour Government. [Interruption.]
(13 years, 2 months ago)
Commons ChamberI am grateful to the hon. Lady for the U-turn she has announced.
When I intervened on the shadow Chancellor, he attacked me for opposing the weakening of our border controls. The previous Government were not well known for being strong on border security or on immigration controls, yet he criticised me for standing up and defending my constituency. Just as the motion before the House is fantasy economics, it was the shadow Chancellor’s fantasy that this Government cut our border controls. It was the previous Government who cut our border controls, such was the commitment of the previous Prime Minister to keeping our borders safe. He had the grand plan of selling off our English borders at Dover in a privatisation, so much did he care about England. In many ways, I wish that he were in the Chamber more often, rather than hidden away in Portcullis House, so that we could set forth to him our concerns about the policies he pursued. The recession and misery that have been brought upon people up and down the land by his serial mismanagement of the nation’s finances are nothing short of a disgrace.
The Labour party has gone from government to opposition, but has learned nothing and forgotten nothing. It has proposed a £13 billion unfunded VAT cut—populist but unrealistic. It has made £10 billion of welfare reform spending commitments—nice for the base of people in dependency culture, but unrealistic and unaffordable. We need to ensure that work pays.
No.
We already have a situation in which our debt interest costs us £49 billion a year. We cannot afford to carry on like this. We need to get the nation’s books back into balance, and the country back under control. The Government are doing exactly that.
Let us look at the detail of the Opposition’s motion. It refers to 25,000 new affordable homes, but the reality is that in the five years of the previous Conservative Government, 34,786 affordable housing units were built on average each year, compared with 24,560 under the last Labour Government. That is a 30% fall in the amount of affordable housing built. The Labour party should not be proud of such a record, and no one reading the motion before the House can have any trust in the Labour party on the issue. The motion refers to jobs, which Labour destroyed during the latter part of their period in office.
(13 years, 2 months ago)
Commons ChamberThe debate we have had—in Committee and this evening—shows some of the pitfalls of saying, “We are going to simplify benefits.” The Minister and his colleagues have said to the country generally, “We're going to simplify benefits. This is a simpler system, so it must, by definition, be a good thing.” They expected and, indeed, got from many people the answer, “We agree that benefits should be simplified.” The problem is that when dealing with real people and real situations it all becomes much more complicated, as our debates tonight and on previous occasions have demonstrated quite clearly.
The details of issues such as school meals, health charges and the even bigger matter of child care are extremely important, and will have a real impact on whether the new system works for people, will make them better off, and enables them to get into employment, stay in employment, improve their circumstances and get out of poverty. We all agree that, except for those who suffer from real and deep health problems, employment is the best way out of poverty. If, however, such an important element as child care is left so undefined, we cannot know the answer to that question.
Frankly, we are being asked to buy a pig in a poke. We are told, “If you don’t accept it, don’t vote for it or don't agree with it, you are throwing over the whole issue of welfare reform.” I do not accept that. Nor do I accept the Minister’s view that he was given that sort of response by the previous Government and that there should be simply a framework—an empty bookcase, as he was wont to say in Committee—as there was before. It seems to me that if he thought it was wrong then—and it sounds as if he did—it may still be wrong now. As I said in Committee, people should not be asked to buy that empty bookcase without knowing whether it contains classics or cheap comics.
The Government have gone to great lengths to engage all parliamentarians, including the hon. Lady, in discussions about the nature and design of child care. Is she saying that she would prefer the Government to present a fait accompli, rather than listening to her and giving her a chance to inform, and possibly change, Government policy?
In general, I should prefer legislation not to be pushed through all its stages until more of the details have been dealt with. When the original Bill was presented to the House, some of the consultations with the public were still taking place. An important consultation about disability benefits, with which we shall deal later, had not finished before the Bill was printed, and consultations about child maintenance did not end until April, when proposals were already in writing. There are other ways of doing things, and the fact that they have or have not been done properly by past Governments does not strike me as a reason for not trying to do them properly now.
Child care is particularly important to people who want to improve their position. The hon. Member for Dover (Charlie Elphicke) said that we had been consulted, and indeed we were invited to a briefing at which we were presented with certain scenarios, but I am not sure that I gained a very clear understanding from that session of exactly what the Government were proposing. I subsequently received briefings from other organisations, as no doubt has the hon. Gentleman, expressing the view that the new child care arrangements, such as they were—the proposals had not been finalised—would not leave people better off. It is a question of what we accept and what we believe.
It is difficult for us to form a view, but it is possible that if we do not get the child care arrangements right, many people will decide that work does not pay. They will feel either that they must reduce their hours considerably, or that they cannot afford to continue their work and must give it up altogether. I do not think that that is the outcome that the Government seek.
The hon. Lady clearly supports the fait accompli proposed by the Opposition—including, it seems, the ending of the whole principle of the mini-job, which would imprison people with child care responsibilities in their homes. Does she really think that that is the answer?
I am not convinced that the new clause does away with the entire principle of the mini-job, although I would certainly have liked—preferably before we embarked on the Bill—a debate about what was, for me, a new idea, possibly good and possibly bad. I do not think we have fleshed out exactly what we are doing in this regard.
As I said in an intervention earlier, if the idea is to encourage people to undertake work involving all hours of employment—given that they are able to obtain such work—I am not sure where the so-called mini-jobs will be found or what their quality will be. Are we talking about six or eight hours a week, as some people seem to be? Where will the jobs be, to what extent will they increase earnings, and will the necessary child care be available?
I think that it often made a lot of sense for people to work for 16 hours and more, and issues such as child care were key to that. In many cases, child care costs kick in when hours like that are involved.
We should not try to justify reductions in child care provision simply by saying that they may help another group who need a certain amount of help—and, indeed, they may not do so. We need to examine the model thoroughly, because otherwise we will not know what will happen. Depending on which version of the proposals the Government decide to adopt, help for child care for people working 16-plus hours may be cut and there may not be a call on child care costs for people doing mini-jobs. If that is the case, money would be freed up. I am unsure as to whether there will be a call on it for the following reason.
Some mini-jobs will be at times such as 5 until 8 o’clock in the evening, and those doing them might not have another family member who can undertake child care at that time. Child care costs may therefore be incurred—although I am not sure from what source any child care might be found at such a time of day. When the hours of a mini-job fit in with nursery or school hours, however, child care costs may not be incurred. Therefore, if there is not a call on child care costs for people working fewer than 16 hours, I hope that the available money will be recycled for the people from whom it appears it is to be taken, regardless of whether we know there is a demand for it.
The hon. Lady speaks as though the idea that a woman looking after a child would work for fewer than 16 hours a week is novel and has never happened before. Let us consider the situation for one of the obvious age groups, however: for children aged five to six, some 61% of lone parents who are in work are in part-time work, and 65% of partnered mothers in work are in part-time work. Many of those people will be working for fewer than 16 hours as their children are so very young. Is it right not to help them with child care in those circumstances? Why does the hon. Lady want to persecute people who work fewer than 16 hours a week?
With all due respect, I think the boot is on the other foot. It appears that the people who are to be persecuted are those who work hours for which they require child care and who get assistance at present. Let us consider the proposals that were put before us at the briefing meetings—which I would not necessarily call fully consultative meetings. Under the proposals, it appears that people who currently get child care assistance will have that taken away, and that that will amount to a substantial loss which will lead possibly to their reducing their working hours. If they do that, their ability to move on with their work experience and their lives, and to get out of poverty, will be much reduced. I do not think positing one group against the other is helpful, therefore, and I would much rather we gave assistance wherever we can.
In Committee, Opposition Members were constantly expected to balance our suggestions against the costs that the Government have set up, but we would not start from that point. It is ludicrous to say that the Opposition have no right to make any spending suggestions as we do not support the Government’s model of deficit reduction. If we put more people out of work by cutting our deficit so quickly, as this Government seem intent on doing, benefit bills will rise and tax takes will fall, and we will not resolve the deficit problems in any case. That is one of the major reasons why we have opposed this Government’s stance. If we have a different view on how to tackle the deficit, the speed at which to tackle it, where to reduce spending and the impact of that, it is perfectly legitimate for us not to accept the spending envelope the Government have decided to impose.
I would hope that we would not just think about how we might take a little away from one group that happens to be a bit less poor than another group because we want to help the most needy. I noted in this afternoon’s departmental questions that Ministers were quick to take up one aspect of the Leader of the Opposition’s speech today: the comments he made about people on benefits. They were not so quick to mention his comments about the responsibility of those in our society who are a good deal better off, however. If we do not look at both those issues, we will be making the poor pay the cost of the economic crisis.
The hon. Lady speaks as though everyone is going to be terribly badly off under universal credit, but the figures in table A.2 on page 80 of the Red Book make it very clear that almost everyone is much better off, and that is especially the case in respect of part-time work. Does she not accept that that is positive, and that the Government have made sure that the transition will be managed in such a way that people will do better?
I shall try to unpick that question. First, it has almost been forgotten—I hope not entirely forgotten—that universal credit will be introduced after £18 billion has been cut from this country’s welfare spending, so many people will already be worse off before universal credit comes into effect. Secondly, we do not know when the transitional protection we keep hearing about will end. Will it end and begin only if somebody gets into work or falls out of work, or will there be other circumstances in which that transitional protection will cease, which would mean that many people would be considerably worse off? The third reason that I have concerns about the assertion that people will be better off under universal credit is to do with all the points raised in our discussion of these amendments. Unless we are clear about issues such as the cost of child care and school meals, and how they will be accounted for under universal credit, we cannot know whether the assumptions made, the figures given and the statements made about people being better off will prove to be true.
I agree. In fact, let me use the words of the Leader of the Opposition, who said:
“Finally we will never encourage a sense of responsibility if society is becoming more and more unfair, and more and more divided.”
We know that Labour divided our country more between the rich and the poor when it was in office, and we know that giving people who have £50,000 in the bank out-of-work benefits would be deeply unfair to the ordinary working person in the street.
I apologise for missing so much of the hon. Gentleman’s speech. I am sure I would have been greatly entertained. However, I was not aware that the amendment before the House would give out-of-work benefits to people with savings. This is about people who are working and trying to get themselves back on their feet, which he said he wanted.
If we asked the person in the street, “Do you think that benefits, even universal credit benefits, should be paid to someone who has got £50,000 in the bank?”, they would give us a pretty robust response. I represent a constituency with a lot of deprivation. Average earnings are about £20,000 a year—£50,000 is a king’s ransom to the people whom I serve. Most people could never dream of having so much money in cash. They might have it locked up in their house, but they could never dream of having that kind of money in ready cash. It would be an astonishing position to be in. If I went down Dover high street and said, “Do you think that people should get universal credit if they have £50,000 in the bank?”, the response would be demonstrative, pretty conclusive and probably pretty rude—it would be expletive-laden.
In my constituency, when I knock on a door, like my hon. Friend the Member for Wolverhampton South West (Paul Uppal), and say, “What are your concerns?”, after expressing vehement concerns about the number of overseas visitors, 1 million of whom have taken jobs in recent years, and about the 5 million people who could work but do not, people move on and say, “And that person down the street has a plasma TV and so on, and they have not worked a day in their lives.” We have discussed this important and serious issue. We need to encourage people to take responsibility and to work, and not encourage them through amendments such as amendments 23 and 24, which would allow people to claim benefits despite having £50,000 in the bank.
This whole strand of thinking is symptomatic of a way of thinking that has caused the number of working-age people in relative poverty, after housing costs, to rise from 6.5 million in 2001-02 to 7.9 million in 2009-10. That is a staggering rise. We have to bear it in mind that in those years this country enjoyed the most massive boom, yet a whole load of our countrymen slipped further into relative poverty. It is not just a question of intergenerational poverty or of households that have not worked for ever and ever; it is a question of going into relative poverty. The message sent by amendments 23 and 24 is not one of responsibility. It is not a message that says, “Look, we are on your side. You’re hard-working. We will support you.” The message sent by the philosophy of universal credit is one of responsibility: “If you work hard, you will be better off, and you will not be subjected to the dependency culture.” That has to be one of the most important and essential messages that the Government can send, and it is why the Bill will, in my view, be the most important Bill in this Parliament.
I hope that the House will indulge me on one more amendment—amendment 33, which deals with pensions. If a man aged 66 is married to a woman aged 45, how can it be fine for that woman not to be incentivised to work? I am deeply troubled by this. I put this issue to the right hon. Member for East Ham, and the Minister asked him whether he supported the principle, and thrice the cock crowed, yet he would not deny it—or, indeed, not deny it. It was wrong to table an amendment defending that principle, and to say, when an argument was made saying, “How can it be right?”, “Ah well, isn’t it bad of the Government to sneak it into a schedule.”
The House deserves a better argument than that for why previously people were not incentivised to work, and why the Government are wrong to take action on it. The Government are right to take action, and they are right to send the message that work should always pay, and that, if someone is of working age, they really should work. We have a massive mountain to climb: there are 5 million people in this country who could work but do not, who have been encouraged to live in a dependency culture, and who would be worse off if they went into work. There is much evidence that that sucked in 1 million people from abroad and overseas to fill the 1 million or so jobs created during the recent boom, while we cast 5 million people on to the slagheap of welfare dependency.
(13 years, 5 months ago)
Commons ChamberMy hon. Friend makes a powerful point on behalf of her constituents, for whom she is such a brilliant advocate. As she and I know, the difficulty is the amount of money in the kitty, which is massively in the red. We have a structural deficit of £109 billion and borrowings this year of more than £150 billion. That is the poisoned economic inheritance that the previous Government left, having maxed out the nation’s credit card and brought this country to the brink of bankruptcy. What do they urge us to do? Opportunistically, they urge us to cut taxes. How would they do that? They would borrow more money, as we know from the shadow Chancellor’s Bloomberg speech, and raise interest rates on mortgages for the average householder, who struggles to get by as it is.
Did the hon. Gentleman actually listen to what his hon. Friend the Economic Secretary to the Treasury said earlier about the impact of VAT rises and fuel cost rises on businesses? They mean that businesses go under, people are put out of work and they then buy less? Is that not the crux of the issue? If we want growth, we need to give people income with which to purchase things.
The crux of the issue is that we have to stop the draining of money from the public finances, right the nation’s finances and get this country growing with a pro-business agenda. That is what the Government are looking at, and I hope that in the Budget next week we will see a pro-growth, pro-business, pro-jobs and pro-money economic policy, which we have not had for the past decade. We have been brought to the brink of ruin by the amount of debt that the previous Government encouraged ordinary people to get into and, indeed, managed to get the public finances into. This Government are about putting those things right: ensuring that our housekeeping personally and as a nation is put back on the level. That is really important.