Universal Credit and Working Tax Credits

David Linden Excerpts

Wednesday 15th September 2021 Commons Chamber

[Dr Coffey]

I would expect the hon. Gentleman to be welcoming the investment that we will be making in getting people not only into work but into better-paid work. I am sure that will have a direct impact on supporting the economy in his area.

[David Linden (Glasgow East) (SNP)]

Will the Secretary of State give way?

[Dr Coffey]

I have already given way a bit, so I will make some more progress.

Let us recognise that not everyone was fortunate enough to be furloughed; sadly, many people were made redundant. Fortunately, we had the universal credit system, and with the mass efforts of the great civil servants in my Department, we responded instantly to support the millions of people who turned to us for help. I will never tire of praising my Department for how we helped those at their lowest ebb. I know that that would simply not have been possible with the old benefits system. People would have been queuing round the block trying to get into jobcentres, especially in the middle of a lockdown. It may be an inconvenient truth for Opposition parties, which have constantly tried to demonise universal credit, but universal credit proved itself even more during the pandemic, showing that it worked both by design and in delivery.

[David Linden]

I, too, pay tribute to the civil servants and the work coaches in the Secretary of State’s Department. That is the point that I want to explore with her. We all understand that unemployment is yet to spike. We expect that there will be problems as a result of the furlough scheme ending. I think that is widely anticipated; indeed, the Government have gone around opening temporary jobcentres and appointing more work coaches until March next year. If the Government understand that unemployment is about to spike, why are they removing this uplift to universal credit right now?

[Dr Coffey]

Of course, we now have a record number of vacancies, but we are also about being ready and anticipating. The OBR forecast that there would be a significantly higher unemployment effect as a result of what happened, and it mattered that we had jobcentres and work coaches ready to help people with that. I hope that we can now make sure that our army of work coaches can continue to help just under 2 million people still looking for work to get into those 1 million vacancies, as well as their efforts to help people progress in work.

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[David Linden (Glasgow East) (SNP)]

I want to begin by describing the importance of this debate:

“There are plenty of times where I’m getting such bad hunger pains that I can barely move.

I can last for a while without eating. I’ve been trying to put my mind off the hunger by either doing exercise, or maybe doing a bit of work on my computer.”

That is a quote from Morgan. He is 23 and has spent six months sleeping on friends’ sofas and occasionally on the street. He is currently suffering from severe depression that impacts on his ability to work. As a universal credit claimant, Morgan has stated that the proposal to cut the £20 uplift is

“literally like taking food off my table.”

That is the reality of life in Tory Britain—the reality of a decade of austerity measures and cuts to social security. Morgan is just one of 5,917,053 people, because that is the number of people who are relying on the £20 uplift to universal credit. Throughout this debate, when we inevitably get drawn into the hurly-burly of parliamentary politics, I want us all to keep in mind Morgan and the nearly 6 million people we are talking about, because it is their livelihoods that are on the line and their financial security that is at risk.

We are not talking in hypotheticals. The Joseph Rowntree Foundation’s report lays it bare: cutting the universal credit uplift will plunge 500,000 people into poverty overnight. We all know the impact that the universal credit uplift has had on claimants. The additional £20 per week has been monumental in helping families get by. Audrey Flannagan, who runs the Glasgow SE food bank in my home city, recently told the media:

“If you look at the impact it”—

the universal credit uplift—

“has had on the food bank, last year in the first three months from January to March we saw 601 single people pre the £20 uplift. January to March this year, we saw 151 single people. That’s a massive difference, not all because of the £20 uplift, but a lot will be because of the £20 uplift.”

The uplift to universal credit was desperately needed before the pandemic, and its impact can be seen right across the voluntary sector.

The British Government now have the opportunity to address the failures of universal credit and truly help those who are most vulnerable as we seek to recover from the pandemic. The first step should be to make the £20 uplift to universal credit permanent; indeed, it should also have been extended to those on legacy benefits, who have been so cruelly overlooked and left behind by this Government.

I have heard Ministers defending removing the uplift by repeating the line that it is best for people to get back into work rather than rely on benefits. In fact, the Chancellor himself has said that

“going forward, my view and the government’s point of view is the best way to help people is to help them into work and make sure those jobs are well paid”.

That only goes to show just how little Tory Ministers know about the benefit that they pontificate on. For their benefit, I will explain.

Universal credit supports both those unemployed and those employed on a low income. More than a third of people claiming universal credit are in employment. Of the nearly 6 million people on universal credit, 2.3 million are actually employed. On top of that, a great number of those employed claiming universal credit are parents. The latest figures show that roughly 1.9 million families with children will see their benefits cut at the end of this month.

The Child Poverty Action Group has stated that the number of poor children in working families is on the rise. Even before the pandemic, there were 4.3 million children growing up in poverty in the UK. That is nine children in a classroom of 30—a shocking indictment of Tory Britain. The proposed cut to universal credit will put a further 200,000 children into poverty, including those in working families. It is simply unthinkable.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

My hon. Friend makes a powerful point about the impact on families of low-paid workers. We heard this morning that inflation has now gone up to 3.2%. Workers in my constituency now face an increase in national insurance and higher food costs. They are already facing higher heating costs, and let us not forget that many people in rural constituencies are off the grid for electricity and gas, so it is more expensive for them anyway. This cut to universal credit, according to the Government’s own advice, will cause a catastrophe. Does he agree that, for families in constituencies such as mine, the catastrophe will be even bigger?

[David Linden]

My hon. Friend’s constituency was one of the earliest areas where universal credit was rolled out, so he is familiar with it, and as a highland MP he is acutely aware of the much higher energy bills. The universal credit cut will probably mean a choice between heating and eating this winter for people in his Inverness constituency. He is right to put that on the record, and I hope that Members who represent constituencies in other parts of rural Scotland will bear that in mind, particularly on the Conservative Benches. It is simply unthinkable that the UK Government are even considering this policy. All MPs must consider whether they want it on their conscience when the Division bell rings tonight.

Whether or not someone claiming universal credit is in employment, the £20 uplift is vital to their income. To quote Morgan again:

“We should not have had to have gone through a pandemic just to get that increase”.

Morgan is right. The most vulnerable people in our society had been suffering for decades, long before the pandemic hit these shores. Years of austerity have deepened the inequality and poverty in our society, and the pandemic has only magnified those pre-existing inequalities. Years of austerity have deepened the inequality and poverty in our society, and the pandemic has only magnified those pre-existing inequalities in our welfare system.

A decade of Tory rule has left workers, on average, £l,000 a year worse off. Analysis by the Office for National Statistics shows that, when inflation is taken into account, the average wage is worth less in 2021 than it was in 2010. Despite the continual Tory mantra that getting people into work is the best route out of poverty, wages continue to fall, and austerity continues to deepen inequalities. The pandemic has only served to bookend the decades of cruel welfare cuts and truly highlight how inadequate support has been.

[Joanna Cherry (Edinburgh South West) (SNP)]

Does my hon. Friend share my concern about the fact that, while much of the debate focuses on young people and people with children, older people, particularly older single people, will be affected by this cut as well? I have a 60-year-old female constituent with a mortgage whose hours of work have been cut from full-time to 26 hours a week. At her age, it will be hard for her to find more work, and she tells me that losing this uplift will mean the difference between keeping and having to give up the home that she has worked so hard to pay for.

[David Linden]

My hon. and learned Friend is right to place on record the impact of the pandemic on not just young people but women in particular, especially older women. On Monday we will have before us a Bill that suspends the triple lock; that is another betrayal of a manifesto commitment from the Conservatives—something that may not come as a surprise to those of us on these Benches.

I want to emphasise the sheer number of organisations that are campaigning for this uplift to be kept in place. One hundred organisations, including charities, children’s doctors, public health experts and research groups, have signed a letter calling on the Prime Minister to abandon the plans to cut universal credit. One such signatory was Bright Blue, a Conservative think-tank; some on the Government Benches are members of that very think-tank. We have also seen a letter signed by no fewer than six previous Conservative Secretaries of State for Work and Pensions who have condemned the proposed cuts. All the devolved Governments have also called for the £20 uplift to remain.

Analysis by the Joseph Rowntree Foundation shows that more than a third of working-age families in 413 parliamentary constituencies will be hit by the cut. Of those, 191 are represented by Tory MPs. The Scottish Conservative MPs on the Benches opposite me—if they have bothered to turn up for the debate—will know the consequences of the universal credit cut that they plan to reaffirm tonight. They know the statistics; they know the threat of poverty that hangs over their constituents; and yet they do not care.

In Moray, 6,110 households will be at risk of sliding into poverty. If he does not vote for the motion tonight, the hon. Member for Moray (Douglas Ross) clearly does not care. In West Aberdeenshire and Kincardine, 3,620 households will be going into winter facing harsh decisions between heating and eating. If he does not vote for the motion tonight, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) does not care. In Banff and Buchan, 6,280 households will have to face relying on foodbanks to feed themselves this winter. If he does not vote for the motion tonight, the hon. Member for Banff and Buchan (David Duguid), does not care. In Dumfries and Galloway, 8,190 households will experience huge anxiety and worry over their financial futures, which will take an immense toll on their mental health. If he does not vote for the motion tonight, the right hon. Member for Dumfries and Galloway (Mr Jack) , does not care.

In Berwickshire, Roxburgh and Selkirk, 7,150 households will have their incomes slashed by £1,040, a figure that has become increasingly necessary during the difficult months of the pandemic. If he does not vote for the motion tonight, the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) does not care. In Dumfriesshire, Clydesdale and Tweeddale, 6,050 households will be victims of this heartless Tory austerity policy, which will cement poverty and inequality in that community for years to come. If he does not vote for the motion tonight, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) does not care. It will be clear that the Scottish Conservatives do not care about some of the most vulnerable people in our constituencies.

[Patricia Gibson]

My hon. Friend has set out a powerful series of facts. Given what he has just said, does he agree that it is interesting that the Tories in the Scottish Parliament make great play of trying to address the attainment gap, something which cannot be done as long as children are living in poverty? The House of Commons Library tells us that inequality in Britain has been the worst in north-west Europe in every year of the 21st century for which figures are available.

[David Linden]

My hon. Friend is right to draw attention to the difference between what the Conservatives say in the Scottish Parliament and what they do—that is, in Westminster, probably not vote for this motion tonight. Of course, there is a wider question: what is the purpose of devolution? Is it meant to be a sticking plaster for bad social security policy coming out of Westminster? The Scottish Government can introduce measures such as the game-changing Scottish child payment, and can go further and double that, but if the Government vote for this cut tonight, it will mean that the Scottish child payment is essentially nullified, and that will be in the hands of Scottish Conservative MPs.

[Alison Thewliss (Glasgow Central) (SNP)]

My hon. Friend is making an excellent point about the families who will be affected by this cut. I believe that my constituency holds the record, with 63% of working age families with children who will be affected. Does my hon. Friend agree that, no matter how hard charities, Glasgow SE Foodbank, the local authority and the Scottish Government try to help mitigate that, the cuts from the Tories are so deep that families in my constituency will go hungry this winter, and the Tories will not lift a finger to do anything about it?

[David Linden]

My hon. Friend is absolutely right, and I pay tribute to the work that she has done in trying to lobby the Chancellor, who appears to have decided that he will deploy the politics of Margaret Thatcher and pit people against each other. Unfortunately, it is my hon. Friend’s constituents who will feel the wrath of that.

The British Government need to face the reality of what the cut will mean for people across these islands. Slashing universal credit will impose the largest overnight cut in the basic rate of social security since the modern welfare state began. It will mean millions of families being plunged into poverty, facing real financial hardship as we go into the cold, harsh winter months. So when the Division bell rings tonight, my party will vote Aye to this motion, and we will continue to push for these cuts to be cancelled. However, it is increasingly clear that independence is the only way to keep Scotland safe from the cruel Tory cuts that only seek to deepen inequalities and poverty in our communities.

Independence will guarantee Scotland the full powers needed to build a strong, fair, and equal economy, while eradicating poverty and supporting the most vulnerable people in our communities. So yes, we will vote for the motion on the Order Paper tonight, but I suspect that the only vote that will truly end the ongoing Tory assault on social security is a vote for Scottish independence in the upcoming referendum, and, frankly, it cannot come fast enough.

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. We now have a time limit of five minutes. I call Stephen Crabb.

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[Claire Coutinho (East Surrey) (Con)]

The right hon. Member for East Ham (Stephen Timms) talked about people finding jobs and finding better jobs, so I thought I would start by talking about what is happening in the jobs market at the moment. We have seen increasing wage growth and vacancies at a 20-year high, with 1 million vacancies in this country. We have also seen almost record low unemployment—lower than in the US, France and Canada. Those are exactly the kind of market conditions that we want to see to help people to find better jobs. They show how that the plan for jobs—that £400 billion of support that we put into the labour market—has worked. It also shows that we have 2 million fewer people in unemployment than expected. Surely that is one of the best ways to reduce poverty in this country.

[David Linden]

I am glad that the hon. Lady is keen to talk about statistics. She will be aware that 2,849 people in her East Surrey constituency are claiming universal credit while in employment. What will she say to them when she marches through the Lobby this afternoon to choose to take £20 a week off their money?

[Claire Coutinho]

I will talk about the things that I already talk about with them: the youth hub and the work coaches that the Department for Work and Pensions has put into my constituency to help people into work, and the jobs that we are creating in the local economy, which are helping people into work.

Secondly, on skills, not only have we introduced the kickstart scheme, which is helping 2,500 young people a week into the quality jobs we want to see them in, but we have introduced a lifetime skills guarantee. We have improved schools during our period in government, going from two thirds of children being in good and outstanding schools to 86% of children. We have increased the number of job coaches and the amount of money going into apprenticeships and traineeships. These will all set people up to have a good job and a good life.

We are also looking at the root causes of poverty. I assume the Labour party would support the national living wage, which is an extra £5,400 going into people’s pockets since 2010. We are doing things like the troubled families programme and the reducing parental conflict programme, about which I am particularly passionate because, unlike some Opposition Members, I think relationships, not just financial benefits, are one of the best ways to help people out of poverty. That is really important.

I also highlight some of the inconsistencies I have heard today, which I find quite troubling. The Labour party would keep the triple lock, with its 8% rise funded by working-age people. [Interruption.] Let me go through what is happening: 2.5% last year, 2.5% or more this year and back to the triple lock next year. The Labour party would keep it at 8%, funded by working-age people—£5 billion out of their pockets.

Let us talk about pay rises for those who helped us during the pandemic, which the Labour party voted against yesterday. Let us talk about taxes.

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[James Cartlidge (South Suffolk) (Con)]

It is a pleasure to follow the hon. Member for Halifax (Holly Lynch).

This is not a decision anybody or any Government take lightly. Members in all parts of the House are right to raise the real-life cases to which they refer; these are our constituents and the people we are sent here to represent. I have the greatest respect for the former Secretary of State, my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb), and for my hon. Friend the Member for Carlisle (John Stevenson), who I know feels strongly on this subject. He talked about the need to level up through raising real wages. I totally agree with him on that, and I will be coming back to that point.

However, I wish to start by focusing on the opening remarks of the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). I have a lot of time for him. He puts his case in a very reasonable tone, and I am sure he feels as passionately about his views as I do about mine. His argument was, in essence, that Conservative Members do not understand the benefits system and the fact that some people in work receive these benefits. That is very far from the truth. Let me share with him my real-world experience. I have put this point on the record several times in these debates, because it is incredibly important to understand this.

Before becoming an MP, I ran a small business. We decided to award pay rises, and I was shocked when three members of staff declined: one declined the actual pay rise and the other two would not work more than 16 hours. I admit that at that point I did not know about the tax credits system—I had never claimed on it myself and I had not employed people on it—but I then discovered the hard reality of its cliff edges. When two skilled members of staff said to me, “James, I’m sorry but I just can’t do more than 16 hours because of this cliff edge,” I realised the insanity of that—of the state spending billions to put a ceiling on people’s working life and ambitions and on the limits to what they can achieve.

We should never have any ceiling on ambition; we should always seek to enable people to make the most of the natural talents with which everyone is born. That is a fundamental view that I hold, so although this issue is very difficult—I accept that people will be affected, including in my constituency—the Government are, fundamentally, doing the right thing.

We have to consider three key points, the first of which is the impact on individuals, which is the hardest part. It is a question of the extent to which one has faith that individuals can work the extra hours, and that in a vibrant economy with 1.2 million vacancies they can recover that income—and far more, over time—either by working more hours if they are in work or, if they do not have a job, by moving into work.

[David Linden]

Just short of two hours ago, the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), asked the hon. Gentleman how many households in his constituency will be affected by this cut; has he been able to work that out in the past two hours? If he does not know that figure, it would be reckless for him to go through the Lobby today and vote for this cut to his constituents.

[James Cartlidge]

That was quite an odd moment because, as the hon. Gentleman will have noticed, I intervened on the shadow Secretary of State and, slightly cheekily, he then intervened on me, in a completely novel form of Commons procedure. No, I do not know that figure off the top of my head. I represent those households in this House and I know some of them, and we all know that this change will cause issues. This is not an easy decision, and, as I said at the beginning of my speech, it is not taken lightly, but I have faith in our economy. There are 1.2 million vacancies and the owners of small and medium-sized enterprises—such as me—and the owners of big businesses are crying out for labour. They are desperate for staff.

On 5 August, the Governor of the Bank of England, Andrew Bailey, said something incredibly important:

“The challenge of avoiding a steep rise in unemployment has been replaced by that of ensuring a flow of labour into jobs.”

What a position to be in. At the start of the pandemic, we were all fearful that we would see a huge rise in unemployment—probably one of the biggest in generations. The peak was predicted to be 2 million higher; that is an entire recession’s worth of unemployment. I am proud of what we have achieved in keeping unemployment far lower than that, because it is so damaging.

On the impact on individuals, therefore, we must look to the economy and the extent to which people can work the extra hours to make up the lost income, which I am confident people can. The second key point is the impact on the public finances. It would be extraordinary for us, who are charged with being in Parliament to hold the Executive to account for the moneys they raise, not to consider that impact. The hon. Member for Stalybridge and Hyde said from the Labour Front Bench that we could use the headroom to fund the £6 billion, which basically means borrowing the money. But this commitment will be permanent. The hon. Gentleman wants to use what is potentially a short-term position in the public finances to fund a permanent increase in the welfare state.

Here is the context. Labour has said that, one way or the other, it will keep the triple lock—perhaps not the exact scheme, but it would cost several billion pounds more than the cost of the decision we have made. Labour has also said that it would keep the overseas development spend at 0.7%. Those commitments amount to more than £10 billion, and possibly to £15 billion. It is not good enough simply to say, “Use the headroom.” We know what happened when we had a Labour Government who were irresponsible with public money: we had the great recession and all that that meant for people’s livelihoods and for the poorest in society in particular.

The third key point is the impact on the wider economy. As the Governor of the Bank of England said in the quote that I read out, the issue that we now have is not mass unemployment, as we all feared, but a lack of workers. In many ways, that brings its own headaches. Going back to the point made by my hon. Friend the Member for Carlisle, the upside is that we could be moving into a new era in which those on lower wages see much higher real-terms pay growth than they would otherwise have had. That is an incredibly important development. The focus of Government policy should be to improve real wages, bring unemployment down even further, manage the public finances responsibly and drive the economic recovery forward. That is the correct thing to do.

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[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the hon. Lady and the hon. Gentleman for their points of order. How the Government choose to vote is not a point of order for the Chair, but it might be helpful if I remind the House that on 26 October 2017 the former Leader of the House, the right hon. Member for South Northamptonshire (Dame Andrea Leadsom), set out the following:

“Where a motion tabled by an Opposition party has been approved by the House, the relevant Minister will respond to the resolution of the House by making a statement no more than 12 weeks after the debate.”

I am sure that those on the Treasury Bench will have heard that. To address the hon. Gentleman’s point directly, the resolution on an Opposition motion is not a binding resolution, hence my drawing attention to the fact that we assume that a Minister will come to the House within 12 weeks to respond.

[David Linden (Glasgow East) (SNP)]

On a point of order, Madam Deputy Speaker. You will be aware that if the Government do not take action on the universal credit cut, in 12 weeks that £20 a week will be gone from the constituents who we all represent. On a broader point of consistency, the Government have clearly abstained on the vote on the first motion of this Opposition day. The subsequent motion is essentially a motion about House business and would instruct Mr Speaker to set up a Committee. How can the Government claim to have consistency when they abstain in the vote on the first motion and will almost certainly vote against the second motion this evening?

[Madam Deputy Speaker (Dame Rosie Winterton)]

I am afraid I am not really answerable for whether there is consistency in the choices that are made. Every Member has the right to decide whether they want to vote or not vote. I assume that these issues could well be addressed later in the debate, to which we now come.