Damian Hinds
Main Page: Damian Hinds (Conservative - East Hampshire)Department Debates - View all Damian Hinds's debates with the HM Treasury
Welfare Reform and Work Bill
Damian Hinds Excerpts(9 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Owen Smith
My hon. Friend is completely correct, but this cut does not affect only those who are renting and suffering from sky-high, exorbitant increases in private rent; it also affects owner-occupiers. The Government purport to speak for owner-occupiers, but those people will be proportionately harder hit by this measure than many others. Reduced eligibility for tax credits will mean that some people will receive more in housing benefit—there is an offsetting increase in housing benefit costs as a result of the decrease in eligibility for working tax credits, but owner-occupiers will not get that increase.
Earlier someone mentioned the impact of these cuts on our economy, and the self-employed will also be hard hit by these changes. Around 60% of small businesses, some 5.2 million across the country, are sole traders, and according to the Royal Society of Arts, 90% of the increase in jobs—the “jobs miracle” that the Government like to talk about—have been in self-employment in recent years.
Owen Smith
Well that may or may not be true, but it is a very large proportion. Without doubt there has been a welcome increase in employment and self-employment, but my point is that 60% of self-employed sole traders are currently eligible for tax credits.
Tom Brake
Indeed, and changes were made to tax credits to take that into account. However, tax credits are now needed to support people who are in low-paid work and will not suddenly see their salaries rise dramatically to compensate them for the loss of those tax credits. The cuts are regressive and should be opposed by the House. I hope that that will happen in the vote that is about to take place on new clause 1.
Damian Hinds
I start by welcoming the hon. Member for Airdrie and Shotts (Neil Gray) to his new position and I wish the hon. Member for Livingston (Hannah Bardell) well in her new role.
These amendments intend to prevent the Government from making future changes to control welfare spending and we cannot support them. The Government’s approach is clear: our mission is to get wages up, taxes down and welfare under control. New clause 1 seeks to revoke the 2015 tax credits regulations and new clause 8 seeks to delay the introduction of the regulations unless and until the Government put in place a scheme of transitional protection for existing tax credit claimants for a minimum of three years. The House will recall that the Government tabled the regulations for a vote on the Floor of the House on 15 September, rather than their being scrutinised upstairs in Committee, to allow wider discussion on the regulations and to allow all hon. Members the opportunity to debate and vote on the issue. This House voted in favour of the regulations.
The House further discussed the regulations in the Opposition day debate on Tuesday 20 October and again voted in favour of them. However, as the House will also be aware, last night unelected Labour and Liberal Democrat Lords voted against tax credit regulations, raising constitutional issues that the Prime Minister will address.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Is the constitutional issue that politicians should not lie to people in their manifestos?
Damian Hinds
I can only guess that the hon. Lady is making a strange reference to the Conservative manifesto. We were very clear in our manifesto that we are still only halfway through the job of getting the deficit down to zero. It stands at £3,300 for every household in the United Kingdom and we said very clearly during the election campaign that, as part of that, we needed to make £12 billion of welfare savings. What was not in our manifesto was the national living wage.
The Chancellor has said that he has listened to concerns from colleagues in this House and will come forward with proposals in the autumn statement to achieve the goal of reforming tax credits, saving the money needed to secure our economy while helping with the transition through the changes. I do not believe that the new clauses are therefore appropriate for inclusion in the Bill.
I now turn to amendments 49 to 52, which intend to prevent the freeze for four years of working age benefits, child benefit and tax credits. The freeze of the main rates of the majority of working age benefits, child benefit and tax credits will, in total, contribute some £3.5 billion of savings by 2019-20, and will help us to achieve our objective of deficit elimination. It will put welfare on a fairer and more sustainable footing so that we can continue our investment in our national health service and our schools, even as we get the national finances back into balance.
As my hon. Friend the Member for Fareham (Suella Fernandes) pointed out, there is an imbalance in a system that has seen a rise in average earnings of 12% since 2008, and in working age benefits, such as jobseekers’ allowance, of 21%. The individual element of child tax credit has risen by 33%. The freeze will help reverse that trend, helping earnings to grow faster than benefits, which will strengthen the incentives to work, and deliver the savings necessary to bring down the overall welfare bill. None the less, the Government will continue to offer protections to the most vulnerable. We know the best way to support people is to help them move closer to the labour market, but of course we realise that that is not possible for everyone. That is why we have made many important exemptions to the four-year freeze. We have exempted pensioner-related benefits, personal independence payment, disability allowance and attendance allowance relating to the additional cost of disability as well as statutory payments, carers’ allowance, the support group component of the employment and support allowance and disability elements in tax credits.
Simon Hoare (North Dorset) (Con)
The list that the Minister has just given to the House underscores entirely the compassionate, one nation Conservative approach that we are taking to these issues in sharp contradistinction to the Opposition parties, which seek to lecture but which have no remedy.
Neil Coyle
Will the Minister be absolutely clear that the half a million disabled people receiving ESA in the work-related activity group will not be protected under the measures that he has just outlined?
Damian Hinds
People who are in the work-related activity group are, by definition, people who are to be helped to move closer to the labour market. What I have said in the list of exemptions that I have read out is that the amounts that are specific to the additional costs of disability are protected, which is something that we discussed in Committee.
Damian Hinds
If the hon. Gentleman will forgive me, I will not give way, because it is 3.2 pm and I need to stop by 3.5 pm.
Amendments 53 and 55 seek to remove clauses 11 and 12 from the Bill, and amendment 54 seeks to retain the payment of the family element of child tax credit for all persons who are responsible for a child or a qualifying young person born before 6 April 2022.
The Government want to ensure that the system is fair both to those who pay for it and to those who benefit from it. Currently, the benefit system adjusts automatically to family size, but many families who are only in receipt of income from work would not see their budgets flex in the same way when they have more children. The Government want to encourage those families who are in receipt of benefits to make the same financial choice about the number of children they have as those families who are supporting themselves solely through income from work.
Damian Hinds
If the hon. Gentleman will forgive me, I will not give way.
That is why the Government have proposed changes to child tax credit and to the child element of universal credit, as set out in clauses 11 and 12 respectively. The Government will look at the important issues around exemptions through secondary legislation, which is a better way of dealing with these matters. Indeed, we discussed when that could be done in Committee with proper reflection and working together with stakeholders and experts.
I also wish to make it clear that the changes will not affect families already receiving the child and family elements before 6 April 2017 and who remain on benefit after that date, including such families who subsequently leave universal credit for a period of less than six months, and families who make a new claim to universal credit and who have been in receipt of tax credits for more than two children or qualifying young persons in the past six months. In addition, the Government will continue to support larger families through child benefit, which is paid for all qualifying children in a household, and paid at a higher rate for the first child.
In conclusion, the amendments oppose our clear mandate to find £12 billion of welfare savings and to restore fairness to the system by ensuring that work always pays. In making these changes, we have balanced the vital task of bringing spending under control while ensuring that the support is there for those who need it most. I therefore urge hon. Members to withdraw their new clause.
Question put, That the clause be read a Second time.