Universal Credit Work Allowance

Debate between Gerald Jones and Oliver Dowden

Wednesday 6th January 2016 Commons Chamber

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

Thank you, Madam Deputy Speaker, for giving me the opportunity to speak in today’s debate. I promise that I will try to be brief.

In his autumn statement on 25 November, the Chancellor trumpeted that he was reversing the proposed cuts to tax credits in full, stating that he had abandoned plans to impose £4.4 billion of cuts from this April. It now appears that he is doing a U-turn on his U-turn, because in the short time since the autumn statement it has transpired that he has lined up similar cuts affecting many of the same working families, this time to universal credit. It seems that he is ushering in a new postcode lottery by pushing ahead with cuts to universal credit, which will leave some families up to £3,000 a year worse off than others in exactly the same circumstances.

We have heard the example of a single mother of two, working full time on the minimum wage and claiming universal credit, whose net income next year will be £2,981 lower than that of someone in the same circumstances who is claiming tax credits. Meanwhile, a single parent of two on a salary of £18,000 a year will see their overall income fall by £2,601 next year if they are on universal credit. As my hon. Friend the shadow Secretary of State indicated, analysis shows that from April, cuts to the work allowance will also mean an annual reduction of £2,000 a year in support for disabled people in work, which is clearly a particular concern.

My constituency will be hit hard by the proposals, with 2,000 families being affected in 2017, 5,000 in 2018, 8,000 in 2019 and 10,000 by 2020. Across our country, the need for food banks is increasing. I mention that because in many cases, food bank support is provided more to people in work than to those out of work. Perhaps if the Minister and the Secretary of State took the time to visit food banks and talk to the many thousands of volunteers, they would get a better appreciation of the hardship that is being endured. The proposals to cut tax credits will make matters much worse for people and hit working families—people the Government say they want to help and are committed to helping.

I say to Conservative Members that these measures will cause great hardship to many vulnerable families across our country, in all constituencies. The Tory Government have choices. We have seen announcements of billions being allocated to the most well-off by cutting inheritance tax and further support being handed to big businesses by cutting corporation tax.

[Oliver Dowden]

There is a repeated assertion on the inheritance tax cut. Even by 2021, the inheritance tax cut will cost less than £1 billion, which is in no way comparable to the savings that are achieved through the welfare reforms. We cannot magic up the savings by not proceeding with the inheritance tax cut alone.

[Gerald Jones]

That is one example of the wrong choices being made by the Government but there are others. They have given further support to big businesses by cutting corporation tax. They have chosen to continue the cut in the top rate of income tax from 50% to 45%, allowing someone earning £2 million a year to continue to pay £250,000 a year less in income tax. Those are clearly wrong choices, and they are made on the backs of ordinary working families. Against that background, the decision to penalise working families who are already struggling to make ends meet is wrong in so many ways.

The changes will cause worry and undue stress to millions of families. I therefore urge Conservative Members to support the Labour motion today, and not to turn their backs on working families.