Autumn Statement Distributional Analysis, Universal Credit and ESA

Heidi Allen Excerpts

Wednesday 16th November 2016 Commons Chamber

[Heidi Allen (South Cambridgeshire) (Con)]

It is almost a year to the day that I stood here making my maiden speech and joining Members from all parts of the House to ask for reconsideration of the planned tax credit cuts. We understood and supported the need to reduce the welfare bill, but the planned cuts would have left a gaping hole in low-earning families’ incomes.

Looking back, that was an easy argument to win. No one with a compassionate bone in their body would have thought it good policy to cut the incomes of low-paid working families before replacement systems were put in place, in the form of the national minimum wage and tax threshold increases. However, the reprieve and relief that came in last year’s autumn statement were short-lived, and the legacy work allowance reductions are still embedded in universal credit. Only its slow roll-out has stopped the ticking time bomb exploding.

Our mission now, as it was last year, is to ensure that everyone understands the risks of leaving universal credit as it stands. Although Brexit continues to dominate the headlines, we need to keep our Prime Minister’s vision of creating a Government that works for the “just managing” focused and equipped to deliver. We must demonstrate that we are not only a competent Conservative Government, but a compassionate Conservative Government. It is the detail that matters. It means going beyond the headline statistics and looking at the human detail—the cost, the names on the spreadsheets. It means getting to grips with the impact analysis of policy change.

Life is still very hard for families on low incomes. The high cost of accommodation, low wage growth, rising inflation—apart from today— and the cost of living mean that the transformation of our benefits/work system is not yet over. Brexit means that it may not be business as usual for quite some time; if anything, the economic volatility on the way means that things are about to get a whole lot harder—an estimated £1,000 a year in earnings harder, and that is before we even get on to talking about the cuts in universal credit.

Families transitioning from tax credits to universal credit will receive financial protection; that is a sensible decision, and that is the good that Government can do. A national minimum wage, recent income tax cuts and 30 hours of free childcare—assuming it can be delivered—are the good that Government can do. However, understanding that those three very positive policies still will not offset the cuts in universal credit for the poorest third of families to the tune of £500 a year is the good impact analysis that Government can do.

Brexit has polarised society, with divisions running through communities and even across family dining tables. The Prime Minister has vowed to lead for all, repair those rifts and reunite our country. On both sides of the House, we will struggle to explain that vision to the 3 million families who will be worse off on universal credit than their legacy tax credit neighbours. We can deliver unity only if we treat all just-managing families the same.

Keeping the work allowances in universal credit at the reduced levels set in the summer Budget last year means a single parent without housing costs will be up to £2,800 a year worse off than their tax credit next-door neighbour. A couple with children and no housing costs will be up to £1,200 a year worse off than their tax credit next-door neighbour.

Universal credit has it in it to be the greatest enabler of social change this country has seen in decades. Funded as it was intended, it will support people every step of the way as they make their transition to independence from the state.

Let us get out of our well-heeled shoes and put ourselves in someone else’s for a day. If I were a single mum with little family support, working 10 hours on the national minimum wage and taking home about £240 a week, would I work another 12 hours just to take home a further £36? I am sorry, but I probably would not, and I am coming from a starting point of mental comfort and emotional calm.

Effective policy must understand the lives of the people who will be affected by it. To keep this country firing on all cylinders post-Brexit, we need the workers who run the engine to be able to afford to operate it. I have said it before, and I will say it again: we need every teaching assistant, every careworker, every cleaner and every shop worker to secure our future, and if people are not supported into work, and up in work the engine—the country’s engine—stops turning over. Is it really worth taking a risk with that?

There are options to better fund universal credit. We could review the arbitrary 2.5% factor embedded in the pension triple lock, as my hon. Friend the Member for South Suffolk (James Cartlidge) mentioned, or we could review the planned further income tax allowance changes and question whether that expenditure is being efficiently directed to the right audience.

Quite simply, we need to give universal credit its mojo back, and that means restoring the work allowances that drive it. Only if we do that will the wording of the Government’s amendment—that “work pays” under universal credit—be true. Currently, as work allowances are set, it is not.

I could go on for longer on the subject of universal credit, but I would run out of time, so I will turn to the aspect of the motion that deals with employment and support allowance. I will be brief for I suspect that most Members know where I stand on this.

[Mr Burrowes]

How much of a priority is it that we make changes ahead of this autumn statement, rather than waiting until April?

[Heidi Allen]

I think it would send a message and set the fiscal tone that this Government care and are listening to those who, as I mentioned, are running our engine. It would set the tone by saying that this country is, and will continue to be, open for business and can afford to run itself.

Turning to employment and support allowance, I am, of course, delighted that we have a Green Paper coming, and early signs from disability charities are that it is being very well received. However, it is still only a Green Paper and is still subject to consultation, so I remain uncomfortable, just as I was back in February, that the £30 per week planned cut is still in place.

With a new Prime Minister and a new Government, we have a priceless opportunity to build a system that supports and realises the aspirations of people with disabilities. That clearly and rightly is the Government’s mission, so let us not waste it by retrospectively fitting policies to savings targets agreed in a different era.