Universal Credit Work Allowance

Greg Mulholland Excerpts

Wednesday 6th January 2016 Commons Chamber

[Greg Mulholland (Leeds North West) (LD)]

I welcomed the Chancellor’s U-turn on tax credits and praised him for it. It was the right and courageous thing to do. I pay tribute to colleagues on both sides of the House who worked together to achieve it, and colleagues in the other place. I particularly pay tribute to colleagues on the Government Benches who had the courage to tell the Government that they were wrong and that the measure would hit hard-working families.

Imagine the dismay of those people—many of the very same people who thought they had escaped a £1,400 cut in their low income from next April—who now find that, through a different mechanism, they will suffer in exactly the same way. That decision was merely a delay and a temporary reprieve. Those people will feel duped and betrayed. I serve notice on the Government today that the Liberal Democrats will table an amendment in the House of Lords and seek co-operation from other parties and Cross Benchers to seek to bring the Government’s measure down, to show them that they cannot introduce the tax credit change by the back door, which is exactly—disgracefully—what the measure is about.

The reality of the figures is worrying, but the reality of the people affected is disgraceful. According to Liverpool Economics, the net effect on the income of lone parents will be a reduction of £2,600. Disabled people will see a net reduction in income of £2,000. The net effect on couples with children will be a reduction of £1,000. Some 2.6 million working families will lose out if the cut to universal credit goes through. A couple on £20,000 a year with two children were looking forward to being £160 better off due to changes in the personal allowance in April after the tax credit cuts were scrapped. They would have welcomed that very strongly, but that same couple now face a cut from April—in just a few weeks’ time—of £1,030.

The Social Mobility and Child Poverty Commission—the Government’s own advisory body—has said that

“there is a risk that incentives to progress in work for many families could end up being worse than they were…The immediate priority must be…reversing the”

planned

“cuts to work allowances…before they are implemented”.

Despite the reversal on income tax credits, the proposals merely delay the impact on those relying on state-funded wage top-ups. Why, therefore, have we heard not one word from those who had the courage to oppose tax credit cuts when exactly the same cuts in a different guise are here today? Asking people to work 200 more hours a year simply shows a Conservative Front Bench and a Government who are out of touch.

My question for the Chancellor and the Secretary of State for Work and Pensions in the short term is why there has not been a proper impact assessment of the change. Will they now do one? What do they have to hide? Will they also respond to the view of the statutory body, the Social Mobility and Child Poverty Commission, which they have not done so far? Let me be clear that the Liberal Democrats will seek to overturn this measure in the House of Lords. They are right to do so. Let us hope that once again we will see a U-turn from this Government, because this is not acceptable and hits the people who they purport to be seeking to help.