Universal Credit Work Allowance

Debate between Eilidh Whiteford and Chris Stephens

Wednesday 6th January 2016 Commons Chamber

[Dr Whiteford]

The whole point that I am trying to make is that any progress that has been made will be undone if the Government remove the work incentive, which is the work allowance. It is the aspect of universal credit that makes it possible to earn more when they work. By cutting the work allowance, the Government are going to impose an eye-watering level of marginal taxation on people in low-paid jobs and make it harder than ever for those in low-income households to break out of the poverty trap. If the Government were serious about making work pay, if they were serious about boosting the UK’s productivity and if they actually wanted to help people get on, they would be increasing the work allowance, not reducing it. That would be a genuinely progressive measure, and it would actively help those in low-paid work.

[Chris Stephens]

Are not my hon. Friend’s arguments also supported by the Institute for Fiscal Studies, which said in a report after the Budget that the cut to the work allowance

“weakens incentives for families to have someone in work”?

[Dr Whiteford]

Lots of think-tanks and non-governmental organisations have been queuing up to point out that this measure removes work incentives. It strikes me that increasing the work allowance would be a far more progressive measure than, for example, raising the personal tax allowance, which benefits higher-rate taxpayers such as ourselves far more than anyone in low-paid work.

The cuts to the universal credit work allowances are being introduced via the Universal Credit (Work Allowance) Amendment Regulations, which a Delegated Legislation Committee considered last November under the negative resolution procedure. My hon. Friend the Member for Glasgow South West (Chris Stephens) opposed the cuts at the time, because it was clear to him, as it was to me, that reducing the amount that a household can earn before universal credit starts to be reduced would hurt low-income families in certain circumstances very badly indeed, and would remove work incentives for those households.

It causes me great concern that, instead of being fully debated here in the Chamber, the changes were enacted through delegated legislation without the scrutiny that their consequences merited. As far as I am aware, the Department for Work and Pensions has yet to produce a proper impact assessment of the changes to the work allowance, so we are very much dependent on external bodies for worked impact analyses. I would be grateful if Ministers said today that they will publish an impact assessment, particularly given that the Social Security Advisory Committee has expressed concerns about the adequacy of the evidence base for evaluating the changes. We can get up in this Chamber and spout as much hot air as we like, but if we lack the proper evidence or use the evidence so selectively to back up only our arguments, we really will fail the people who depend on the support of our social security system.

In late December, the Social Mobility and Child Poverty Commission said that

“the net impact of changes to universal credit...on work incentives is largely negative due to significant reductions in the generosity of work allowances.”

It pointed out that claimants who pay income tax will keep only 24 p in every extra pound they earn. They would need to earn an extra £210 a week to make up the losses from a reduced work allowance—a staggering rate of marginal taxation that makes a mockery of the notion that any work incentives will be left in universal credit. Incidentally, it is important to get away from the false idea, which has been creeping into today’s debate, that there are taxpayers and then there are people on benefit. Work allowances are for people who are working—the clue is in the name—in low-paid jobs.

Scotland Bill

Debate between Eilidh Whiteford and Chris Stephens

Monday 9th November 2015 Commons Chamber

[Dr Whiteford]

I am very conscious of time and I need to move on.

The bottom line is that we would rather not be at the mercy of the UK Government. I would rather that we had the powers in Scotland not simply to mitigate the worst side effects of Tory policies, but to develop better alternatives.

With the very limited welfare powers in the Bill, the Scottish Government have already made a range of commitments about how they will use them and develop ways forward. They have committed to ensuring that carer’s allowance matches jobseeker’s allowance; to abolishing the bedroom tax; to replacing the Work programme, which is just not working; and to using the flexibilities in universal credit to offer people more choice about how they manage the money, and they have consulted more than 70 stakeholders about how the new powers can best be used in the interests of our people.

Our new clause 19 would devolve control over employment rights and industrial relations, including trade union law—another area where the Bill falls far short of the Smith commission recommendations. Once again, the new clause is extremely topical, given that tomorrow we will conclude our consideration of the Trade Union Bill. Last week, I met trade union members from my constituency who left me in no doubt about the harm the Bill could do to industrial relations in Scotland and throughout the UK. By contrast, the new clause would allow the Scottish Government to take a different approach and maintain the benefits of the largely stable and constructive relations we have in Scotland.

[Chris Stephens]

Will my hon. Friend confirm that Scotland’s workers’ parliament, the STUC general council, supports the devolution of employment law and industrial relations? One reason for that is so that we can do more work with the Scottish fair work convention and stop the scandalous situation of 46,540 cases of unfair treatment in the workplace?

[Dr Whiteford]

My hon. Friend makes a pertinent and important point. In calling for the transfer of powers of employment law, health and safety, trade union law and the minimum wage, the STUC has noted the appetite in Scotland for reducing income inequality and the desire to forge a more positive relationship with trade unions.