Women and the Cost of Living

Debate between Harriett Baldwin and Sheila Gilmore

Tuesday 19th November 2013 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

The Government’s response to all questions about falling living standards and rising costs is to talk about the raising of the income tax threshold. At least one part of the coalition is promising even more of the same and saying that that is how we help the lowest earners, many of whom are women. However, if the main aim is to assist the lowest earners, it is an extremely poorly targeted policy. It is an expensive tax cut. Three quarters of the billions of pounds that have been spent on raising the tax threshold have gone to the top half of earners in our country.

[Harriett Baldwin]

Is the hon. Lady arguing that the income tax threshold ought to be brought back to £6,475, as it was under her Government?

[Sheila Gilmore]

I will continue with what I was saying, because it is important to realise the cost of this policy to many women.

This generous gesture, which has advantaged more people on upper earnings, has been balanced by taxes and cuts elsewhere, such as the raising of VAT. Many of the cuts have affected women in particular. The cuts in tax credits have more than cancelled out the rise in the tax threshold for the lower-paid. People who have been affected by that will not be saying, “It was great that the tax threshold was raised.” They would probably rather have stayed in exactly the same position as they were in before.

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[Harriett Baldwin]

The previous Government, as we heard from the hon. Member for Edinburgh East, thought it was appropriate to tax people earning only £6,500 per year, and to give them their own money back in the form of tax credits. I believe it is more important that we do not take that money in the first place.

I want to demolish what the hon. Member for Ashfield (Gloria De Piero) said on disposable incomes. Since the start of the economic downturn, the average equivalised household income has fallen by about £1,200 since 2007-08. The Opposition talked about the average fall, but the richest fifth of households have seen largest fall. In contrast, after accounting for inflation and household composition, the average income for the poorest fifth of households has grown in the same period by 6.9%—a statistic from the Office for National Statistics. I refute the argument inherent in the motion that we have had a particularly serious impact on the cost of living for women.

I would also like to demolish the claim in the motion that the Chancellor has made

“women pay three times more than men to bring down the deficit”.

I have taken the trouble to look at the Full Fact website, which I recommend to Opposition Members. It makes a line-by-line demolition of their claims. For example, women such as me, who earn more than £60,000, no longer receive child benefit. That is counted as a negative, but I would argue that that is a sensible way to reallocate scarce resources. The Opposition count it as a negative that the income tax cut does not help women as much as men, whereas I think it is a good thing that women are given a tax break.

The third point I would like to demolish is that it is a problem for more women than ever before to be in work. I welcome it. One reason this has been a successful area of welfare reform is that the number of lone parents out of work—I accept that the number of lone parents out of work declined under the previous Government—has declined sharply since 2010, falling by 26% to just under 500,000. I agree that that is still too high and we have more to do, but we are doing an enormous amount—providing free child care and helping lone parents into work—to help them to lift their own families out of poverty. There are other positive aspects of welfare reform for women in the workplace. Although well intentioned, a terrible consequence of Labour’s approach to welfare is that it trapped many women in 16-hour-a-week jobs. I have met many women in my constituency who have said, “I have been offered more hours, but it does not make economic sense for me to take them.”

[Sheila Gilmore]

Will the hon. Lady give way?

[Harriett Baldwin]

I do not have enough time, I am afraid.

In fact, we were paying a lot of women to maintain 16-hour-a-week jobs. That may be ideal for some people’s family situation, but it sends a poor message, through the welfare system, that we need to tackle. We need to allow women to progress up the income scale in the same way as men so that—I do not often argue for higher taxes—men and women pay the same amount of income tax. At the moment, women pay approximately 60% less income tax and I would like to see progress on that.

The motion is full of holes. I urge right hon. and hon. Members to vote against it.

Income Tax

Debate between Harriett Baldwin and Sheila Gilmore

Wednesday 28th November 2012 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

It was a privilege to be present for the maiden speech of the hon. Member for Cardiff South and Penarth (Stephen Doughty), who spoke eloquently and passionately about his local area. The picture that he painted has made me eager to take the first possible opportunity to visit his constituency.

Let me begin with a small maths problem that I often pose to students in my constituency. If income tax rates were set at zero, how much income tax would the Chancellor raise? The students always get the answer right: it is zero. I then ask this question: if the Chancellor set the income tax rate at 100%, how much more income tax would he raise? Usually, someone will put his or her hand up and say, “He would raise a lot more.” I should welcome an intervention from any Opposition Member who has a view on how much income tax the Chancellor would raise if the rate was set at 100%.

[Sheila Gilmore]

Giving such an extreme and ridiculous example is unhelpful, as I think the hon. Lady is well aware. No Opposition Member is suggesting that the income tax rate should be 100%.

[Harriett Baldwin]

I seem to recall that in my lifetime—under the Government of, I think, the predecessor but one of the hon. Member for Cardiff South and Penarth—income tax was set at more than 90%. If it were set at 100%, we should have no income tax revenue, because no one would consider it worth while to work.

I then ask my students what would happen if we lowered the rate of income tax from 100% to 70%. Would we raise more or less revenue? Again, I should welcome interventions from Opposition Members. Everyone realises that we would raise more revenue, because if the rate was 70%, we would take home 30p in the pound. I notice that the new socialist Government across the channel recently introduced that income tax rate. We will see how that stacks up over time, but I expect that it will prove to be a deterrent to additional work, too.

The motion contains the seeds of its own mathematical inconsistency, because the Opposition are extrapolating a linear relationship between the income tax rate and the amount of income tax revenue raised. They are also extrapolating that those who can, in what is a global market, take their labour to any other country in the world will not take into account any difference in tax rates between the UK and other nations, yet all the evidence shows that that is not the case.

The Labour motion refers to 8,000 people paying income tax on income of £1 million or more. In 2009-10, which is the last tax year in which we had the 40p tax rate, some 16,000 people had an income of £1 million or more. Through raising the tax rate from 40p—a rate that was in place for all but one month of Labour’s entire 13 years in office—we can see that millionaires can do other things with their income. They can take their entire labour overseas, or they can decide to shelter their income or not to take a dividend that year, or they can use any of the other methods to ensure they do not pay that increase in income tax. There was a reduction of £7 billion in revenue after the income tax rate went up from 40p to 50p.

Welfare Reform Bill

Debate between Harriett Baldwin and Sheila Gilmore

Monday 13th June 2011 Commons Chamber

[Sheila Gilmore]

Of course people have to work, and of course they have to be able to work in real, proper jobs. The hon. Members for St Albans (Mrs Main) and for Truro and Falmouth (Sarah Newton) should think, at times, about the type of jobs that they are talking about, and the kind of experiences that people will have. I want to be sure that those who go into work undergo a proper job progression rather than becoming stuck in a sideline meaning that a box can be ticked because they are now working and have some work experience.

[Harriett Baldwin]

Does the hon. Lady not accept that that is exactly what happened when people were stuck in jobs that paid them to work for 16 hours, so that it made no sense for them to work for 15 or 17?

[Sheila Gilmore]

I think that it often made a lot of sense for people to work for 16 hours and more, and issues such as child care were key to that. In many cases, child care costs kick in when hours like that are involved.

We should not try to justify reductions in child care provision simply by saying that they may help another group who need a certain amount of help—and, indeed, they may not do so. We need to examine the model thoroughly, because otherwise we will not know what will happen. Depending on which version of the proposals the Government decide to adopt, help for child care for people working 16-plus hours may be cut and there may not be a call on child care costs for people doing mini-jobs. If that is the case, money would be freed up. I am unsure as to whether there will be a call on it for the following reason.

Some mini-jobs will be at times such as 5 until 8 o’clock in the evening, and those doing them might not have another family member who can undertake child care at that time. Child care costs may therefore be incurred—although I am not sure from what source any child care might be found at such a time of day. When the hours of a mini-job fit in with nursery or school hours, however, child care costs may not be incurred. Therefore, if there is not a call on child care costs for people working fewer than 16 hours, I hope that the available money will be recycled for the people from whom it appears it is to be taken, regardless of whether we know there is a demand for it.

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[Sheila Gilmore]

I shall try to unpick that question. First, it has almost been forgotten—I hope not entirely forgotten—that universal credit will be introduced after £18 billion has been cut from this country’s welfare spending, so many people will already be worse off before universal credit comes into effect. Secondly, we do not know when the transitional protection we keep hearing about will end. Will it end and begin only if somebody gets into work or falls out of work, or will there be other circumstances in which that transitional protection will cease, which would mean that many people would be considerably worse off? The third reason that I have concerns about the assertion that people will be better off under universal credit is to do with all the points raised in our discussion of these amendments. Unless we are clear about issues such as the cost of child care and school meals, and how they will be accounted for under universal credit, we cannot know whether the assumptions made, the figures given and the statements made about people being better off will prove to be true.

[Harriett Baldwin]

The hon. Lady has repeated the much-quoted figure of £18 billion being taken out of welfare spending, but does she acknowledge that £3.75 billion of that is coming from higher rate taxpayers such as myself who receive child benefit on a four-weekly basis? Would she like me to get my child benefit back after 2013?

[Sheila Gilmore]

In answer to that, let me give a personal view that I would not want to attribute to all my colleagues, as I am unsure whether they would all accept it. If we feel that we can no longer pay child benefit as it was previously paid and that we must make savings, it would have been much fairer to have made that part of taxable income. For many reasons, that would have avoided some of the anomalies that the Government’s proposal has set up. However, we have frequently rehearsed those reasons, so I shall not spend a lot of time talking about them now. If savings had to be made, we might have ensured that some of that money came back in the way I have suggested. I personally think that, subject to a fair taxation system, that would be a better way of dealing with this issue than having the suggested abrupt cut-off.

I want to talk about savings, and in particular the savings cap being introduced on people who work. It is astonishing that this change should be made by a Government who have so much to say about their wanting to encourage people to get back on their own feet, to be self-reliant and to save for their future. It is very easy just to say that the average amount of savings of a person of working age is only £300—and that is frightening and appalling for our society if it is true. However, for those people who currently—[Interruption.] I do not know what is so funny. Currently, people who have savings and receive tax credit have been able to get assistance without losing that money, but the Government’s view appears to be different for those who fall on hard times, no matter what their circumstances are, and no matter what situation they find themselves in. We will, no doubt, have this debate again on Wednesday when we discuss non-contributory and contributory employment and support allowances. The Government’s view seems to be that the first thing someone should call on in difficult circumstances is any savings that they have previously been able to make. There is a lot that is unacceptable about that.

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[Sheila Gilmore]

It is important in this debate to get away from the attempt to say that one group of people are hard-working taxpayers and another group do not pay tax and should have their rights diminished. The taxpayer may also be receiving certain benefits, if we feel that it is correct for them to do so. People pay taxes in all sorts of ways. They pay council tax, VAT and often income tax at various points in their life. They may do that while they are receiving benefits or they may have done so just before a change in their circumstances took them below the threshold for paying income tax; they may have had to reduce their hours or they may have been forced to do so. These are not different groups of people.

In our approach to these issues we need to consider the following seriously: we should see our welfare state not only as something into which all of us pay when we can, but as something from which we have an opportunity to take when things happen to us. These two groups of people should not be fighting each other. Someone should not say, “I am hard working; you are not. You should not be getting, because somebody else is working.” At a lot of the income levels that the hon. Gentleman mentions people probably will be entitled to benefits, be that help with their rent or council tax, or some other benefit. I ask the Government to think again about their attitude to people who are doing exactly what they have been asked to do, which is to get into employment, to work hard and to save. I ask the Government not to keep this savings provision in the Bill.

[Harriett Baldwin]

I welcome the opportunity to discuss the child care element of the universal credit. We did not have the chance to talk about it at length in Committee, but we all got invited to a discussion with the Secretary of State on the various different options for child care. This is an essential part of the equation that any parent considers when deciding the best way for them to approach the workplace.

I wish to talk about a slightly different approach from the one in new clause 2. I disagree with new clause 2, because I do not think that it takes the right approach, and I want to say exactly why. First, it retains the characteristic whereby someone has to work for a minimum of 16 hours to qualify for support with their child care. That fails to take into account an entire psychological barrier and frame of reference that a parent can have when they move into work. It is very hard to take the first steps into work, particularly when someone makes that choice—which, as we have heard, is optional, with smaller children. Those are large steps to take, so allowing parents to move into work by doing fewer hours—perhaps two days a week in the office or at work—is an extremely important part not only of encouraging a parent to move into the workplace, but, importantly, encouraging parents to maintain contact with the workplace when their children are small. That is a really important benefit of the approach that the Secretary of State has been discussing with us.

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[Harriett Baldwin]

I vividly remember going back into full-time work after maternity leave—and on that first day back, frankly, one is amazed that one’s child is still alive at the end of the day for which they have been left with someone else. The psychological transition is very important, and taking it in smaller incremental steps—perhaps with more generous support—is extremely important, because it builds up trust in the alternative child care while also allowing the child to get used to it in small steps. I urge the Minister to suggest that the Department consider some other iterations along those lines.

My other point concerns the review of the consultation put forward by the Secretary of State.

[Sheila Gilmore]

rose—

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[Harriett Baldwin]

I shall give way to the hon. Lady, who was so generous in giving way to me.

[Sheila Gilmore]

Will the hon. Lady consider whether, in this debate, we have got ourselves into the situation of being forced to contrast one group of people who are trying to work against another? Perhaps she would care to join me—I am not sure whether my Front Benchers would agree with me, and perhaps her Front Benchers would not, either—in saying that it would be better to give child care assistance to people who work all hours. Perhaps we should join forces to argue for that.