Welfare Benefits Up-rating Bill

Christopher Pincher Excerpts

Tuesday 8th January 2013 Commons Chamber

[Mr Marcus Jones (Nuneaton) (Con)]

Thank you for calling me to speak in this important debate, Mr Deputy Speaker. I have been here since the start and have heard a lot of rhetoric, particularly from Opposition Members. For me, this Bill and this debate are about striking a balance between the state providing a safety net for those who need that support and not putting the burden of any changes on to those least able to react to reductions in income, and taking into account the hard-pressed taxpayer.

I fully support the decision to retain the uprating of long-term disability benefits at the rate of inflation, as I support the triple-lock guarantee for the basic state pension. Those benefits are paid to groups that in general would find it impossible to increase their income, and it is right and proper that we fully protect them. That brings me to the people who will be mainly affected by the Bill. They broadly represent two groups in our community: those on out-of-work benefits and those receiving benefits in work.

I shall take the former first. No doubt, it is a terribly difficult decision to limit the increase to 1%, but, that said, unemployment benefits, by definition, should be a short-term safety net. The Government and Parliament should do all they can to get people back into work as quickly as possible. I know from my constituency that things are starting to work in that regard, and I am delighted now to see more bespoke help through Jobcentre Plus and the Work programme, and measures such as the enterprise allowance, the work experience programme, the Youth Contract and the push on apprenticeships are all starting to make a difference. Couple that with the universal credit, and 3.1 million people will benefit from increased support for getting into work. That will make a huge difference.

I turn to those affected who are in work. Again, in an ideal world it would be fantastic to uprate working benefits in line with inflation, but in the world of inevitable reality we all know that that is unsustainable. The creation of the tax credit system unleashed a bureaucratic leviathan on the country, and billions have now been spent on bureaucracy: £4 billion has been written off in errors and bad debts already and, as we heard today, another £4 million is likely to go the same way. It is far simpler to put people in a position where they pay less income tax, and I am glad and proud that the Government are doing that. Personally, I would like to see that extended, so that we can continue to move away from that bureaucracy.

The deficit, which is the most important issue facing the country, has to be dealt with in a way that is fair to the taxpayer. There is no doubt that difficult decisions have to be made to deal with it, and I am mindful that many people’s wages have been frozen, uprated at below inflation or even cut. We need to acknowledge that the taxpayer cannot bear the burden indefinitely.

[Christopher Pincher (Tamworth) (Con)]

My hon. Friend is right to say that taxpayers cannot continue to bear the burden. Does he agree that the 258% increase in tax credit spend between 2003 and 2010 was unsustainable?

[Mr Jones]

I thank my hon. Friend for his comment. He is absolutely right that we are in a difficult position that we can no longer sustain.

That brings me on to another point. This afternoon, I have observed a certain mood among the Opposition. Far from being pragmatic, they have been completely ideological. What puzzles me is that before the last general election Labour pledged to cut spending roughly in line with the coalition’s current rate of deficit reduction, but since then they have opposed virtually all the cuts, including £80 billion of savings proposed to welfare. The question for the Opposition, therefore, is: if all those changes are unacceptable, what do you propose to do? Do you want to cut the NHS? Do you want to make more cuts to policing? Do you want to cut local government? Do you want to cut education?

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[Mr Stewart Jackson (Peterborough) (Con)]

I do not criticise Labour Members for their aspirations. There is nothing ignoble in the positions that they are taking; I just happen to believe that they are wrong. They know that the picture of despair and hopelessness that my right hon. Friend the Secretary of State saw in Easterhouse in 2002 was the same picture that the right hon. Member for Birkenhead (Mr Field) saw in 1997, when there was an historic opportunity for the then Labour Government to tackle welfare dependency and rebalance work and welfare. Unfortunately, they did not take that action.

People out there are decent; they care and their attitude is, “There but for the grace of God go I.” They do not want to stigmatise people, and nor do Government Members. I accept that there has been some rhetoric on both sides of the House, but people do care. They also care about the dependency culture, and about fairness. In all honesty, they feel that the previous Labour Government tested their patience on this issue.

It is disingenuous to talk about cruelty. I think that it was cruel to park 1,000 of my constituents on invalidity or incapacity benefit for more than 10 years without the opportunity—[Interruption.] I should remind Labour Members that this was in 2010. Those people were given no opportunity to inform anyone of their needs. People suffering from depression or other mental health problems, and people with physical afflictions, were simply parked and forgotten. I am not saying that the Labour Government did that because they were cruel or heartless; they did it because they were incompetent. We are taking the tough decisions that will make work pay, through the Work programme and through apprenticeships that will tackle youth unemployment, which the previous Government doubled. Work is the No. 1 determinant in taking people out of poverty and breaking the cycle of children seeing their parents unemployed, living in a half-life of hopelessness and poverty and lacking ambition. That has been demonstrated across the world.

[Christopher Pincher]

My hon. Friend is quite right to say that work provides the best way out of poverty. Does he agree that the 5.2 million people who were trapped in dependency when the economy was growing in the boom years under Labour are evidence of the previous Government’s structural failure to deal with poverty?

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[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I am sorry that we are so pressed for time, because these are issues of real public interest, and I think that they deserve more scrutiny than we are able to give them this evening.

I believe that the 1% cap on the uprating of working-age benefits is an inherently regressive measure. It will make people on low incomes even poorer, will increase deprivation, and will widen the gap between the haves and the have-nots in our communities. It will particularly hit parents in low-paid or part-time work who are already struggling to make ends meet because of the wider economic climate.

I shall oppose the Bill’s Second Reading. Labour’s amendment proposes that the House should decline it a Second Reading, and posits a guaranteed job offer for those who have been out of work for a long time. On the basis that that is a laudable aim, I am prepared to support it, albeit with a caveat. I have listened carefully to the debate, but I have heard no details of how such a proposal could be put into effect in any realistic way. I would not want to endorse any particular scheme until I had seen whether it was workable and fundable in practice.

The Bill will hit those who are working, especially those who are supporting and bringing up children, especially hard. Many people in lower-paid private sector jobs have seen their hours cut recently, and many who are working part-time want to work full-time but cannot find full-time jobs or pick up extra hours. Meanwhile, they are struggling to juggle work with child care.

As others have said, notably the hon. Member for Brent Central (Sarah Teather), we all need to take responsibility for the way in which we portray people who are unemployed. We need to recognise that those who are jobless should not necessarily be blamed for their joblessness, and that the rises and falls in unemployment are caused by wider economic factors more than by individuals’ aspirations. We also need to recognise that the greater part of the savings made here will be taken from people who are working, often in very physically demanding and fairly unrewarding jobs.

Like the right hon. Member for Rother Valley (Mr Barron), I was struck by the comments of the Citizens Advice Bureau on the impact assessment. We had seen no impact assessment until this afternoon, and we have still seen no equality impact assessment. According to the CAB’s calculations, a family consisting of two full-time workers earning the minimum wage with two children, living in private rented accommodation, will be losing £12 a week by 2015. Disabled lone parents will suffer, as will families with a single earner. What those examples mask, however, is the disproportionate impact of the rising cost of living on households with very low incomes. The worst of the cold winter weather is probably still ahead of us, but the rises in domestic fuel bills will cause a very nasty hangover in the spring.

[Christopher Pincher]

Will the hon. Lady give way?

[Dr Whiteford]

I will give way briefly.

[Christopher Pincher]

The hon. Lady talks of the impact on low-income families. Is she aware that, as a result of the Chancellor’s autumn statement last year, some 1,400 people in her constituency are being taken out of tax, and 30,000-odd are better off in tax?

[Dr Whiteford]

I am delighted to be able to respond to that point. What has been shown by the monitoring of the Citizens Advice Bureau and the Institute for Fiscal Studies, and by the Government’s own impact assessment—which we received very belatedly—is that the combination of the tax and benefit changes will hit the lowest deciles of the income spectrum much harder than the middle and upper deciles. The lowest five deciles are hit hardest, and within that the lowest three are hit worst of all. Many of those are hard-working people and they deserve more. We have heard much criticism of the tax credit system this afternoon, but the Government have failed to address the reason why we need a tax system when people who are working full-time in demanding jobs cannot afford to bring up their children without depending on extra support from the state. That is the underlying issue, and until we have heard how the Government plan to address poverty for working people, we should not even be talking about a below-inflation rise in benefits.

The other issue that should be taken into account, which has been raised by other Members, is that food prices are rising. That is to do with the bad harvest that we have had here due to the very wet summer but, more importantly at a global level, bad harvests in the US and Russia have put the prices of basic commodities way up. In the past year potatoes, probably the great staple of our own food economy, have gone up in price by more than 40%. That is having a disproportionate impact on very poor people, compared to people like us. A 1% increase in an MP’s salary would give us an extra £600 a year. The increase of 71p or 72p for a jobseeker does not compare. There is a quantitative, material difference.

The cap means that there would be a 4% cumulative cut in support to low and middle income families, which will increase material deprivation. The Government have got their priorities all wrong. Asking low and middle income families to bear the brunt of cuts while insulating the very richest is the wrong choice to make, and I look forward to the day when in Scotland we can make these decisions for ourselves.