Welfare Cap

Heidi Allen Excerpts

Wednesday 16th December 2015 Commons Chamber

[Mr Vara]

The hon. Gentleman speaks of Christmas spirit. In that spirit, perhaps he would like to apologise to the House on behalf of his party for the mess that it left us. Perhaps he would like to apologise to the people out there—yes, the public—who endured misery and ended up being unemployed under Labour’s policies. Perhaps he would like to apologise to the taxpayers for letting the welfare budget get completely out of control. As a result, we are having to take the tough decisions. [Interruption.] I am happy to give way to the hon. Member for Pontypridd (Owen Smith) if he would like to apologise. [Interruption.] I have given him the opportunity to apologise but he would rather not do so.

[Heidi Allen (South Cambridgeshire) (Con)]

On the subject of Christmas, I would just encourage all of us, please, to remember that there are people at the heart of these decisions, and this should not be the moment for political footballs. We are here to say that things have changed and that our view, policies and outlook have changed. I implore every Member in this House to remember that we are speaking on behalf of people, not our own personal political agendas.

[Mr Vara]

My hon. Friend makes a very good point, and let me put on the record the fact that it is our welfare programme that is improving people’s lives. It is no bad thing occasionally to ask the people who created the mess to apologise. I think the public outside would welcome an apology, because they have had to endure quite a lot of misery as a consequence of the people who took the decisions earlier on. She makes a good point when she says that people are watching, but I would also say to her that those people want an apology. I make no apology to the House for requesting that apology from the Opposition.

--- Later in debate ---

[Ian Blackford]

Indeed. Perhaps Opposition Members could handle the appeal—let us see how they would get on in such circumstances. I have some sympathy for the Minister, though, because it is the Chancellor of the Exchequer who ought to be answerable to the House on this issue.

Of course, the Chancellor has form when it comes to missing targets. Let us remind ourselves that the Government have spectacularly missed their targets for the budget deficit and for net debt. We were supposed to be in the black by now, but with growth and tax receipts in particular consistently coming in below target, the deficit and debt have remained above target. We must pose the question: when will the Government learn that their false optimism has a price, and that price is the cuts to budgets as they seek to balance the books?

On the autumn statement, the Office for Budget Responsibility managed to magic up an additional £27 billion of forecast revenues—talk about a sleight of hand to dig the Chancellor out of another hole of his own making. We know that the OBR has a history of over-estimating tax receipts. The respected Paul Johnson, director of the Institute for Fiscal Studies, said of the Chancellor’s plans:

“If he is unlucky—and that’s almost a 50-50 shot—he will have either to revisit these spending decisions, raise taxes, or abandon the surplus target.”

Talk about having form. If I may use some football terminology, I would not want the Chancellor to take a last-minute penalty for my team in a cup final—he would only miss the target. Own goals are much more the Chancellor’s speciality.

Why am I raising these matters? It is because social security spending is linked to the failure to deliver a robust economy, drive up tax receipts and limit the need for the safety net that social security provides. That is why the welfare cap is wrong: it does not deal with the cause of, or the need for, welfare.

The disastrous policy—made in No. 11 Downing Street—of punishing millions of hard-working families by reducing tax credits and thereby dramatically cutting the income of lower-paid workers has, thankfully, been reversed. If the benefit cap is breached as a consequence of sense prevailing, we should be grateful. We are mindful, however, of the fact that although the vindictive impact of the tax credit cuts has been avoided, there will be pain in years to come because the Government are still wedded to reducing the social security budget by £12 billion, with universal credit bearing the brunt.

We are not fooled by the Chancellor’s words that this is a reversal of the Tory ideological assault on the most disadvantaged. He announced that he would, in effect, spend £3.4 billion in 2016-17 to reverse the changes to the threshold and the taper rate, but it is important to note that the planned reductions in tax credits for families with more than two children will still apply. Ian Mulheirn of Oxford Economics said that

“this may be a U-turn in April 2016, but it doesn’t look like a U-turn by 2020.”

I want to point out that the IFS estimates that cuts in universal credit will mean that 2.6 million working families will be an average of £1,600 a year worse off.

The continued lack of ambition by the Tory Government to take fiscal responsibility means that alternative action must be taken in Scotland to put off the impact of the austerity we are now facing. I am glad that the Scottish Government have taken measures, as they have in their budget today, to protect the people of Scotland. The Institute for Public Policy Research, an independent think-tank, has found that low-income families in Scotland will face a reduction in income of more than £800 by 2020 as a result of UK Government cuts, but the richest 40% will see an increase in income as a result of the tax cuts.

We are in this situation not because of structural issues with social security, but simply because we have not been able to drive sustainable growth to a level that would drive job creation and, crucially, raise real wages, which is the best way of curtailing the demand for social security. We cannot fix the problem of poverty in our country by cutting social security, particularly in-work benefits, but we can do so by creating the circumstances that allow people to find meaningful employment, and in doing so work the hours that will assist them to put food on the table and to heat their homes.

[Heidi Allen]

Will the hon. Gentleman reflect on one of the elements of universal credit, which is that it is not just an IT system but an entire way for people to work with a mentor and somebody in the jobcentre who will assist them to build a life of better employment and higher wages? That is what he should be talking about if he wants to get people out of poverty.

[Ian Blackford]

Absolutely. We fully support that: we want people to be able to move out of poverty and into meaningful work that is well paid, where the social security system will support them. We would happily support some reforms, but problems remain in relation to the level of sanctions and the cuts to universal credit that will happen over the next few years.