Budget Resolutions and Economic Situation Debate
Full Debate: Read Full DebateDepartment: Department for Work and Pensions
Chris Leslie
Main Page: Chris Leslie (The Independent Group for Change - Nottingham East)Department Debates - View all Chris Leslie's debates with the Department for Work and Pensions
Budget Resolutions and Economic Situation
Chris Leslie Excerpts(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Leslie (Nottingham East) (Lab/Co-op)
Good morning, Madam Deputy Speaker.
When one cuts through the rhetoric and the headlines that the Chancellor spun, one sees that yesterday’s Budget leaves working people worse off. It is the working families of Britain on low incomes, trying their hardest to do the right thing, who will pay the price for the gap between what the Chancellor said and the truth of what his Budget actually means. The Office for Budget Responsibility has flatly contradicted the right hon. Gentleman’s claim to have lowered taxes, pointing out on the first page of its analysis that tax increases are twice as big any tax cuts over the course of this Parliament. It is a Budget that is entirely concerned with chasing headlines to further the Chancellor’s well known political ambitions, rather than putting the working people of Britain first.
Pulling the rug from under people on low incomes with a hefty work penalty in the tax credits system— 3.3 million working families will lose out from these changes, with 500,000 families losing tax credits entirely—despite Tory denials before the election, will hurt those in work.
Mrs Sheryll Murray (South East Cornwall) (Con)
Will the hon. Gentleman give way?
Mrs Murray
Will the hon. Gentleman confirm that former Chancellor Alistair Darling told a meeting this morning:
“Labour is in disarray… We are paying the price of not having a credible economic policy”?
Chris Leslie
I did not realise that the hon. Lady was a conduit for the former Labour Chancellor of the Exchequer. I will certainly look closely at what he said, but I did not hear him say those words this morning.
I want to ask Ministers about the work penalty that they have introduced into the tax credits system. Did they know before the election that they were going to hit those who needed tax credits to make work pay, or was it deliberately hidden from public view because of the shock that such a cut to incomes would create? This was a Budget that exposed the Chancellor’s skewed priorities—a Budget that failed to build the more productive economy that we need, that ducked long-term decisions on vital infrastructure projects, and that sought to substitute spin for the support people need to go to work.
Chris Leslie
I will give way to the very eager Conservative Members in a moment, but I want to make a little progress.
We do recognise that sensible savings are needed to get the deficit down, and we will support measures that tackle tax avoidance and control overall household benefit levels. We regret that the Budget fails to address the overpayments and errors in welfare expenditure, which have ballooned in recent years during the welfare Secretary’s time in office, let alone his lamentable record on delivering the mythical universal credit, for which so many people are still waiting. As my right hon. and learned Friend the acting Leader of the Opposition said yesterday, we will be a responsible Opposition; we will not oppose for opposition’s sake, and we welcome a number of the Budget measures.
Chris Leslie
Let me pick who I want to give way to. I give way to the hon. Member for Thornbury and Yate.
Luke Hall (Thornbury and Yate) (Con)
Alistair Darling used a very simple set of words. He said:
“Labour is in disarray”
and is
“paying the price of not having a credible economic policy.”
Does the hon. Gentleman agree?
Chris Leslie
I have not used those words. The hon. Gentleman is reporting words that have apparently been said.
I believe it is important that the Opposition today look at the spin and the headlines that the Chancellor created in his Budget yesterday. Less than 24 hours later, the Budget is beginning to unravel—[Interruption.] Have I said something wrong? The Budget is beginning to unravel and I will explain why, but in the spirit of magnanimity I want to explain that there are Budget measures that we welcome. The Budget fails to address the long-term challenges Britain faces—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am desperate to hear what Mr Leslie is going to tell us. Keep shouting and you will not even be able to ask the right questions.
Chris Leslie
Thank you, Mr Deputy Speaker.
Many parts of the Budget were suggested by Labour in recent months. Abolishing permanent non-dom status—that sounds very familiar to my hon. Friends. Increasing the minimum wage—again, we have repeatedly called for that. We welcome any action on low pay—by the way, the Conservatives opposed the creation of the national minimum wage in the first place—but this so-called national living wage is unravelling as it becomes clear that it is nothing of the sort. It is the rebranding of an increase in the national minimum wage—as I say, Labour created that in the first place—which, with the tax credit changes, will still leave working families worse off.
We will support steps to tackle tax avoidance—again, we have consistently pressed the Government on that—but this Chancellor has a poor record on hitting tax avoidance targets, with the amount of uncollected tax increasing to £34 billion last year and his so-called tax deals continually failing to bring in the revenues he predicted. In yesterday’s Budget, the Conservatives broke their manifesto promise to deliver £5 billion of savings by 2017-18. The Chancellor made that promise at the last general election, and he is now saying that we might perhaps get it by the end of this Parliament. We will file the supposed £5 billion of tax avoidance measures in the “believe it when we see it” category.
Frank Field (Birkenhead) (Lab)
May I say how much I welcome my hon. Friend’s statement that Labour welcomes the Government’s announcement yesterday to move towards a living wage? Will he confirm in the Chamber what he has said elsewhere—that we will engage very constructively, looking imaginatively at the Red Book, to try to make this more comprehensive and to extend it to the public sector? Does he accept that the more success we have in developing this idea with the Government, the fewer people will be eligible for means tests, and that our aim is not to change means-tested benefits in line with such increases, but to make sure that people can earn enough not to be eligible for means-testing?
Chris Leslie
My right hon. Friend is right that we should be thoughtful about the Government’s proposals. It is sometimes difficult to see through the political fog of the games that the Chancellor is trying to play and the tactics he is trying to use. Oh, the look of innocence on his face! My right hon. Friend is right that it is important to take on questions of welfare reform and work through them methodically. We will not oppose everything just for the sake of it. My right hon. and learned Friend the acting Leader of the Opposition was right to say yesterday that while that might be the temptation, we will look at the proposals and be reasonable about those we can support.
We welcome the steps taken in the Budget to reduce pension tax relief for the highest earners, and of course the rise in the personal allowance threshold, as we support steps to cut taxes and try to get a better settlement for those in work.
Mr Nigel Evans (Ribble Valley) (Con)
Does the shadow Chancellor agree that the Government are absolutely right to work towards a situation in which nobody is better off out of work than in work? If so, why did Labour do nothing about it when it was in power?
Chris Leslie
The hon. Gentleman was doing so well until the little barb at the end of his intervention. Of course we want a situation—there is more political consensus on this than people perhaps realise—in which people in work are better off than they otherwise would be. The problem, which I will come on to later, is the Chancellor’s approach with this particular set of Budget measures. He is pulling the rug from beneath people’s feet while higher wages are not yet available. When we look at the package as a whole, we see that people will be worse off during that period. He cannot just shovel that beneath the rug.
Chris Leslie
I want to make some progress, but I will give way again in a minute. [Interruption.] I will give way now to the hon. Member for Rossendale and Darwen (Jake Berry) if he wants to intervene. [Interruption.] He complains that I am not giving way, but he does not want to intervene.
We will not support self-defeating false economies in the Government’s approach to social security. We do not support an approach that will leave more than 3 million working families poorer, and in turn mean that the poorest children are more likely to grow up into poor adults, which will cost society far more in the longer run.
The Chancellor and Ministers on the Front Bench have a track record when it comes to false economies, particularly during the last Parliament. They scale back nurse training, and then spend a fortune hiring nurses from private agencies, as my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) knows. They cancel major road schemes, such as the one involving the A14, and then revive them later on at vast expense. They pay redundancy to senior officials at the Ministry of Defence or the Foreign Office, and then rehire them at higher cost. They restrain local councils from tackling fraud in housing benefit, and then the level of overpayments escalates to £1.5 billion. They reduce the number of Her Majesty’s Revenue and Customs staff so that phone calls go unanswered from businesses that need to get through, and then are surprised when the tax gap gets wider and revenues go uncollected. And we have a Chancellor with the gall to boast of a northern powerhouse while simultaneously pulling the plug on the electrification of major commuter rail lines.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend will understand the dismay of many across Greater Manchester and the wider northern regions, not just at the pause in the electrification of the line between Manchester and Leeds—and the implications that will have for rolling stock in the north of England—but at the insult yesterday when we were told that we will get an Oyster-style piece of plastic to use on our Pacer trains.
Chris Leslie
It has been said many times, but the powerhouse has become a power cut. As time goes on, many—not just in the north but in the midlands—will see through the rhetoric to the reality that they are experiencing.
The Government are undercutting, not supporting, a productive economy. It says everything about the Chancellor that the impact of his Budget has been to worsen the outlook for productivity in our economy over the rest of this Parliament rather than to improve it. The OBR has done the calculations and its prediction is on page 77 of its report. Its conclusion is stark. The Opposition know that more productive businesses, and a more productive economy, are the key to a virtuous circle of higher growth, higher living standards and, as a consequence, more effective deficit reduction. For the Conservatives, productivity springs magically from thin air, but for us it is decent infrastructure and decent public services that can make all the difference to business success.
In his March Budget, the Chancellor did not even mention productivity, so perhaps we should be glad that he at least found time to mention it yesterday, even if we are still waiting for the much trumpeted productivity plan. I gather that it will be published on Friday, although the House is not actually sitting that day so we will not be able to scrutinise the details. Under this Chancellor, UK productivity has, in the words of the Office for National Statistics, undergone a period of “unprecedented” stagnation.
Rebecca Pow (Taunton Deane) (Con)
I have spoken to leading businesses in Taunton Deane this morning and the Chancellor’s Budget has been broadly described as “great stuff”. It will load the scales in favour of hard-working people. Surely the shadow Chancellor must consider that a positive policy, unlike the disarray of the Labour party’s economic policy, as mentioned today by the former Labour Chancellor.
Chris Leslie
I am astonished: a Conservative Member of Parliament reports positive feedback on the Chancellor’s Budget. I never thought I would hear that: I am aghast.
Alex Salmond (Gordon) (SNP)
The shadow Chancellor may remember that during the Scottish referendum debate last year I described Alistair Darling as “a Tory front-man”. Given what we have heard this morning, might there have been a grain of truth in that remark?
Chris Leslie
I have not read the comments by the former Chancellor, although I keep hearing about them from Members. I will have a good look at them, but it is important that we scrutinise the Government’s record on productivity. Unless we improve productivity in our economy, we will not generate the revenues to deal with the deficit and raise living standards. In 2012 and 2013, our productivity growth was negative, and last year it was just 0.2%. That compares with an average of 2.2% under the Labour Government from 1997 until the global financial crisis hit. It is, therefore, almost beyond belief that on the OBR’s analysis the Budget could lead to lower productivity growth, now estimated to be 0.4% lower than the forecast for next year, 0.2% lower in 2017, 0.1% lower in 2018 and 0.2% lower in 2019—productivity down next year, the year after, the year after that and the year after that.
Geraint Davies (Swansea West) (Lab/Co-op)
Is not one of the reasons for that the fact that the Government are creating lots and lots of low-paid jobs and substituting them for high-paid jobs? In particular, there are 800,000 fewer people earning over £20,000 now than there were in 2010. Is that not a catastrophic record of falling productivity? We want to stand up for the middle earners rising, not just the lowest earners.
Chris Leslie
Government Members will not be interested in scrutinising the compositional issues that are arising in our economy, but the share of jobs that are high-skilled is shrinking back, according to the Office for National Statistics, and being replaced by an increasing share of low-skilled jobs. That is definitely something to be concerned about. In fact, the OBR has voiced its concerns about the productivity threat to our economy, saying:
“If productivity fails to recover as predicted but wage growth continues to accelerate, the MPC could be forced to raise interest rates more quickly”
and wage growth will fall short of its forecast.
Craig Whittaker (Calder Valley) (Con)
Having worked in retail for 30 years before coming to this place, I regularly saw good, hard-working people who wanted to work extra hours being prohibited from doing so because of the loss of tax credits. Does the hon. Gentleman agree that the announcements yesterday on reforms of tax credits and on a living wage will finally break the shackles for those people and let them take control of their own destiny?
Chris Leslie
Hold on. Let us just pause to scrutinise that. I think the hon. Gentleman just said that people should be grateful that they are having those tax credits taken away because that will free them up and make work pay—[Interruption.] Hon. Members speaking from a sedentary position call those tax credits a perverse incentive. I just do not think they understand the lives of those on low pay who are struggling to make ends meet and who rely on the support that tax credits have been able to give. That work penalty is going to cause real problems.
Siobhain McDonagh (Mitcham and Morden) (Lab)
If only what the hon. Member for Calder Valley (Craig Whittaker) said was true and there was an incentive. Actually, the former Chancellor stated that the tapers on tax credits would become worse, so that for every pound over tax credit level that people earn, more of it will be taken away—they will have to pay marginal tax rates of 90% on every extra pound they earn, making it harder for them to get off benefits, not easier.
Chris Leslie
That is very much our critique of the Government today. Of course we want a higher-wage environment and of course we want those jobs to be there, but if we take away that support at that crucial moment, we are going to make people’s lives much, much harder.
Chris Leslie
I would like to make a little progress if I may, because a lot of Members want to get in. In particular, I want to continue to focus on productivity, because there were a number of ways in which the Chancellor’s Budget fell short.
Chris Leslie
No, not yet.
There was no mention of science or research and development in the Budget speech and no steps to increase mobility in the housing market. In fact, the OBR says that 14,000 fewer affordable homes will be built by 2021. How on earth that helps to reduce the housing benefit bill, I do not know. At the same time, the Government are delaying rail improvements, systematically decimating renewable energy investment and kicking the decision on airports into the long grass. There are tough choices to be made, and lower priorities where savings can be made, but the Chancellor has failed to prioritise those public services that boost productivity, and that will cost the country more in the longer run.
Seven Budgets on, it is time that that this Chancellor took some responsibility for his failure to eliminate the deficit this year, as he promised; for the drag on our economy and public finances caused by woeful performance on productivity; for the stagnation in living standards; and for the overruns in the social security budget. Growth has been revised down by the OBR, as has capital investment. These are incredibly difficult times for the wider global economy, but where is the urgent help to support our exports and productivity to tackle that other deficit, which has worsened significantly under this Chancellor—
Chris Leslie
I shall give way in a moment; I just want to talk about the other deficit: the current account deficit, where our trade gap with the EU has worsened and our balance of payments problems have set alarm bells ringing at the Bank of England. The Chancellor’s priority should be to build up the productive capacity of our economy so we can pay our way in the world, but we are still too vulnerable to external turbulence. It should not be neglected in this way. Britain’s current account deficit has widened to 5.9% of GDP, which the OBR states is
“the largest annual peacetime deficit since at least 1830”.
The OBR also reveals that the Chancellor is £367 billion short of his £1 trillion goal on exports that he promised by the end of this Parliament.
James Cleverly (Braintree) (Con)
The hon. Gentleman has said several times that he is willing to support sensible measures to reduce the welfare bill. Can he assure the House that that comment will survive the imminent leadership elections in his party? [Interruption.]
Chris Leslie
Is the hon. Gentleman talking about the imminent leadership elections in the Conservative party or the Labour party? I do not know what is going to happen in the Conservative party leadership contest. There were of course a few little jokes about the hon. Member for Uxbridge and South Ruislip (Boris Johnson), and we will see how that pans out. I know that other Cabinet Ministers are a little concerned about the way that the Budget panned out for them; it is going to be difficult for them over the next few years.
This was the Chancellor’s second Budget in four months. He said in March that that was his Budget for the longer term, yet four months on he has delivered a different plan to a different agenda. He has been chopping and changing, with three different sets of figures in the past nine months alone—so much for his consistency. We learned more about the Chancellor and the nature of this Government in one hour of his Budget speech than we learned in the months of the election campaign. In March, when the Work and Pensions Secretary was pressed about where their £12 billion of welfare cuts would fall, he said:
“As and when the time is right, we will make it very clear what our position is.”
Is it any coincidence that the time is right for these Conservatives two months after an election rather than two months before it?
Before the election, the Conservative manifesto assured us that there would be only a two-year freeze in working benefits, but yesterday the Chancellor doubled that to a four-year freeze in most working-age benefits which will take £4 billion from households by 2020-21. That is one of the fastest-broken promises in political history. [Interruption.] There is an awful lot of noise from Conservative Members. I shall give way to the hon. Member for Richmond (Yorks) (Rishi Sunak) because he has been trying to intervene.
Rishi Sunak (Richmond (Yorks)) (Con)
The shadow Chancellor mentioned the election campaign. In that campaign, the Opposition suggested that they would raise the rate of corporation tax—a move that would damage jobs and growth. Will he confirm that that is still Labour’s policy, or will he start backing British businesses?
Chris Leslie
I think the hon. Gentleman will find that we said in the election that we wanted to focus in particular on business rates. He will know from talking to small firms in his constituency that companies are concerned about the pressures on business rates, but where did the Chancellor mention business rates in yesterday’s Budget? We felt—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. There is far too much noise. In the end, I want to hear, I will hear, and I am sure that you agree with me. Let Mr Leslie speak. He will give way as and when. We do not need be told that he has to give way; it is his choice.
Chris Leslie
We felt at the election that it was more important to prioritise support for businesses through business rates than through a change in corporation tax—but we lost the election. [Hon. Members: “Hooray!”] Conservative Members feel the need to crow about these things, but the public will be concerned that they said one thing before the election and have done totally different things after it. Yes, the Conservatives did win a majority, but they hid their specific cuts from the electorate—they concealed them. It was a secret agenda, only now partly revealed.
Chris Leslie
I will not give way because Conservative Members are not being reasonable and letting me make progress with my speech.
The impact of the work penalty in the tax credits system should have been set out at the election. A lone parent with two children working 16 hours a week on the minimum wage would gain just over £400 from the move to the new national living wage, as the Chancellor calls it, but would lose twice that—£860—from the change to tax credits next year. A couple on the minimum wage who work full time and have two children will gain £1,500 from the change to the minimum wage but lose over £2,200 next year from the changes to tax credits. As the Government were hitting the low-paid, the Secretary of State for Work and Pensions was punching the air. Working families did not vote for that, and they will not be fooled by the Chancellor’s hollow words.
Chris Leslie
Is the Secretary of State going to punch the air? [Interruption.] There we go.
Mr Duncan Smith
May I just take the hon. Gentleman up on the case that he set out? I want to get the figures right. A lone parent with two children who works 16 hours on the minimum wage will, when we add in everything including childcare, actually be better off on the net figures after the Budget.
Chris Leslie
I will give way to the right hon. Gentleman again if he will confirm that the childcare promise, which was supposed to happen this summer, has been shelved until at least 2017. Is that correct? I will give way to him. This is a debate, so I will give way to him. He wanted to talk about the case studies. He thinks it is—[Interruption.]
Chris Leslie
The Secretary of State has shot himself in the foot. He should read the small print of the Chancellor’s announcement. Without much fanfare, he left that childcare—
Mr Deputy Speaker
Order. The Whip needs to relax a little, and we cannot have two people standing at the Dispatch Box, as entertaining as that may be.
Chris Leslie
It is quite entertaining to see the Secretary of State struggle in this way.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
On a point of order, Mr Deputy Speaker. Is it in order for the shadow Chancellor to say that he will give way to the Secretary of State and then not give way? [Interruption.]
Chris Leslie
I relish giving way to the Secretary of State, but he has to answer this question. We have given him a bit of time to think of an answer. He needs to explain the shelving of the childcare support. Will the support come in this summer—yes or no?
Mr Duncan Smith
I remind the hon. Gentleman that the figures I gave were for 2016-17 and they included the childcare.
Chris Leslie
So the Secretary of State is saying that the childcare change will come in at the beginning of that financial year—in 2016. We have heard it from the Secretary of State’s mouth, so it must be true: the childcare changes will come in in 2016. That is the announcement from the Government. It is a bit of an improvement on the announcement we heard from the Chancellor yesterday, who I thought said that the childcare changes were being pushed back to 2017.
The reasons that the cost of social security is £25 billion higher than the Conservatives expected are the underlying drivers of low pay, higher housing costs and insecure work. For all the Chancellor’s spin, this is a Budget that attacks the low-paid and will leave many people in the lurch, unable to make ends meet. If the Conservatives think a solution is to pull the rug from beneath the poorest, stigmatise claimants, rub out the statistics that measure child poverty and hope that the issue will go away, they are deeply mistaken.
We have to deliver a practical route out of poverty, provide a ladder of opportunity and view this challenge as integral to our long-term economic prosperity. We must help people into decent jobs that can be sustained. Cutting tax credits in this way and taking far more with the one hand than is being given with the other will leave too many people trapped on low incomes with low living standards. The ladder is being pulled away from those who want to get on. The achievement of the Labour Administration in significantly reducing child poverty staved off billions of pounds of longer-term welfare expenditure. Those who are in work pay taxes and improve the public finances as a result.
Chris Leslie
I have given way quite generously to Government Members and I would like to make some progress, if they do not mind.
The Institute for Fiscal Studies confirms that the introduction of tax credits played an extremely powerful part in the movement in the child poverty figures. The Conservatives cannot call themselves the party of working people, as they now do, when their Budget leaves millions of working people worse off. How exactly does decreasing their work-related assistance help those who become too sick to work and are on employment and support allowance? Does that policy not run the risk of increasing the number of people who are placed in the more expensive ESA support group, as has been the case in recent years, when the Government have overspent by £4.5 billion on their original plans?
What motivation has a council tenant to get a better job and work for promotion if he or she is on the living wage and the Government take that money away immediately? That is the crude nature of the rent rise that they are proposing. Seeking a contribution from higher earners is, of course, important, and it is one solution, but, as the Government’s own analysis pointed out before the election, going about it in the wrong way will result in perverse incentives and penalties for work.
This was more a Budget of tax rises than a Budget of tax cuts. A rise of more than 50% in the rate of insurance premium tax to raise £8 billion over this Parliament will be a tax hit on the insurance for the family home, the family holiday and the family car. The new car tax will be a surprise that raises £1.5 billion by the end of this Parliament, and—much to the Secretary of State’s surprise—the Government have shelved the childcare tax support that was due this summer until 2017, even if the Secretary of State has now brought that forward by a year.
Catherine West (Hornsey and Wood Green) (Lab)
Does my hon. Friend agree that these measures will further divide communities in high-value constituencies such as those in London, where there are huge gaps between incomes—people with very low incomes are living in the same constituencies as people with very high incomes—and will increase our sense of massive inequality? One of the problems is the failure to deal with the need for a proper living wage. I have experience of introducing a living wage, and it is very hard work. It takes years to achieve, and it means working with businesses. [Interruption.]
Chris Leslie
I do not think that was a very polite reaction from Conservative Members. My hon. Friend worked very hard during her time in local government to try to support the low-paid by introducing a London living wage, and I think it commendable that local authorities and businesses in London, in particular, have tried to make headway with that. Of course, a real living wage now needs to be about £12 to compensate for the reduction in tax credits.
Chris Leslie
I will give way one final time. It is a very difficult choice, but the hon. Member for Havant (Alan Mak) seems particularly keen.
Chris Leslie
When we are writing our manifesto for the 2020 election, I shall give the hon. Gentleman a call. I am afraid that we lost the most recent election, but I think it important for us to reflect on what the Government propose and what the Chancellor announced in his Budget. It is our job as an Opposition to make sure that his spin does not necessarily colour the view of the realities.
The Budget statement revealed that the Chancellor has the wrong priorities for Britain: headlines for himself rather than help for low-income households. We have a chronic shortage of affordable housing, and home ownership is increasingly out of reach for first-time buyers, but the Chancellor’s main housing policy was to reduce the number of affordable homes by 14,000. We need to encourage young people from poorer backgrounds to aim for higher education, but axeing student grants for the least well-off—and, by the way, taking the cap off tuition fee rises, which was not particularly trumpeted by the Chancellor—will make it harder, not easier, for them to do so.
This should have been a Budget to support working people, and to tackle the long-term challenges that our economy faces. The Chancellor is already crowing at his own perceived success in the headlines, but his work penalty in the tax credit system will hit those in work, and leave working people worse off. The Government have failed to make the big decisions that are needed to deliver the modern infrastructure that can make our businesses more productive. They have done nothing to address our alarming and widening trade deficit, and their rhetoric of a living wage has begun to unravel in less than 24 hours.
These are difficult times, and they require tough choices. The deficit needs to fall year on year, our debts need to be reduced, and sensible social security savings are also necessary. But this Budget made the wrong choices for working people and prioritised political gains over the long-term needs of our economy. As ever with this Chancellor, it will be the British people who pay the price for his ambitions.
Mr Duncan Smith
The answer is that the incomes of 2.5 million people will increase, but it is not me who introduced that policy—I give all the credit to my right hon. Friend the Chancellor. Let me also say to the right hon. Member for Nottingham East—
Mr Duncan Smith
I apologise. That is a matter for his leader but—what can I say? Labour has no leader at the moment.
The hon. Member for Nottingham East was talking about the minimum wage and the living wage, and I want to pick up on something he said a fortnight ago:
“Do not the Government need a serious strategy to address low pay and boost productivity? They should be providing incentives for a living wage and new opportunities for high-quality skills, as a more positive route out of poverty.”
Absolutely. He went on to speak about the Chancellor’s Budget before it had been delivered and said:
“Unless he is planning a rise of 25% in the minimum wage, that will not happen.”—[Official Report, 25 June 2015; Vol. 597, c. 1038.]
Well, my right hon. Friend the Chancellor listened to that and initiated a rise of 38% to the minimum wage. The hon. Gentleman must be overjoyed, and will want to tell the House what a great man the Chancellor is and what a great Government we are.
Chris Leslie
Let me be clear: we are glad to see an increase in the minimum wage, but the problem emerges with the one-step-forward, two-steps-backward strategy. We cannot consider this question in the round by just brushing away the work penalty that has been introduced into the tax credit system. The Secretary of State must admit that people who depend on tax credits will lose out in the immediate period from April. Is that the case?
Mr Duncan Smith
No, there is a clear question that needs to be answered. The hon. Gentleman has been asked it but he has not answered, and it would be helpful for us if he would: will he vote against the changes, and do the Opposition plan to reverse the changes on tax credits?
Chris Leslie
I cannot be much clearer in my opposition to the work penalty to the tax credit system. I do not think that it is right at this time to hurt those who are in work and in low pay. Of course we oppose the work penalty, but we support increases in the minimum wage. After all, it was our creation and something that Labour campaigned on in the election. We are delighted that Conservative Members now feel that they can adopt that policy when they campaigned so vociferously against it.
Mr Duncan Smith
I notice that the hon. Gentleman said “at this time” when talking about tax credits. We can take note of that. It suggests to me—indeed, I am sure of it—that after the next couple of years Labour will have abandoned its opposition to the measure.
The measures that I set out in the Budget are vital to delivering the commitments that this Government have always made. We are committed to ensuring that a renewed economy goes hand in hand with a renewed social settlement, yet consider what we inherited in 2010: nearly one in five households with no—[Interruption.] Labour Members really do not like listening to this, but they have to hear it—[Interruption.] I will give way in a minute. Perhaps the hon. Member for Bishop Auckland (Helen Goodman) will sit down. Let me remind her what Labour left behind when it left government: nearly one in five households had nobody working; 1.4 million people had been on benefits for most of the previous decade; the number of households where no one had ever worked had doubled; and close on half of all households in the social rented sector had no one in work. Surely that is a shameful record.
Mr Duncan Smith
I have to say to my hon. Friends that I really have to make some progress, because lots of Members want to speak. They will have a chance to speak later.
With universal credit, people will get up to 85% of their childcare costs paid, which is up from 70% under the previous system. In addition, there will be 15 hours of free childcare if someone has a two-year-old, or a three or four-year-old, and if they are working, while the 30 hours of free childcare a week will be worth £5,000 a year. By the way, the 30 hours of free childcare will start exactly when I said it would—it will be cutting in in the 2016-17 period.
Mr Duncan Smith
No, it is not. I am telling the hon. Gentleman it is not, so he can sit down.
Chris Leslie
On a point of order, Mr Deputy Speaker. It is important that the record is correct. I think the Secretary of State said that the childcare provisions were coming in in 2016 and that this was not a delay to the planned date of 2015. Am I right, Mr Deputy Speaker?