Welfare Benefits Up-rating Bill

Helen Goodman Excerpts

Monday 21st January 2013 Commons Chamber

[Stephen Timms]

Those people will lose council tax benefit, and if they are paying rent, they will lose housing benefit. Citizens Advice is right that the effect of the change in the threshold on people in low-income work is very low indeed.

[Helen Goodman (Bishop Auckland) (Lab)]

Thirteen pence a week.

[Stephen Timms]

My hon. Friend says that the change is 13p week, which is a derisory amount.

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[Charlie Elphicke]

I will in a moment.

It is also unfair on those people who are not in work, because they have no incentive to go and seek work. We need to provide that incentive, not because we want to attack people who are unemployed but because we want to give them every incentive to get work, realise their potential and take the opportunity to do really well in life and be a great success.

[Helen Goodman]

In that case, why does the Bill apply to statutory maternity and paternity leave, adoption leave and sick pay—all those things that are provided for people exactly when they cannot possibly go to work?

[Charlie Elphicke]

As the hon. Lady knows, the principal part of clause 1, which we are discussing, deals with out-of-work benefits. As she also knows, the policy of the Opposition—that uprating should continue according to inflation—and their opposition to this Bill would cost £3.5 billion. Money is tight in this country today. The reason for that is that she and her party drove our economy off a cliff, overspending for years and displaying fiscal incontinence that was unparalleled in this country in the last century.

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[Mr Redwood]

That is where I hope, again, we can try to build a little more agreement. We need to work to avoid that kind of problem.

[Helen Goodman]

rose—

[Mr Redwood]

Let me deal with one intervention and then, of course, I will give way to another.

If we can work to try to prevent that kind of problem from happening again, we might make a bit more progress. My right hon. and hon. Friends have a couple of policies that try to do that. First, they are rightly taking many low-paid people out of tax altogether. I believe in tax cuts for everyone. I do not just want tax cuts for the rich; I want tax cuts for those on middle incomes and low incomes, particularly those at the lower end. The idea of the tax cut for the rich is to get more money out of them; all we are trying to do is get back closer to Labour’s very successful 40% rate, which it kept for almost all the time it was in office. I noticed that its 40% rate collected considerably more revenue than the 50% it bequeathed to the incoming Government, and so it was rather foolish to put in a rate that did not work in taking money off the rich. We are trying to get back to the earlier rate.

[Helen Goodman]

rose—

[Mr Redwood]

I now give way to the hon. Lady, who will now be duly aroused again.

[Helen Goodman]

The right hon. Gentleman clearly did not read the background papers published with the Budget in March, which showed, incontrovertibly, that the amount of money lost by the cut in the top rate of tax from 50% to 45% was £2.5 billion. As he well knows, the only reason why the Government have got cover is because people have been shuffling their income around from one year to another.

[Mr Redwood]

The hon. Lady has chosen the wrong Member to accuse of not reading the Budget papers properly; I am normally accused by my right hon. Friends of reading them too closely. If she read on through those Budget papers, she would see that that top rate led to an almost 10% reduction in the amount of top-level income tax coming in, which is a very foolish position to get into when we need all the money we can get. My right hon. and hon. Friends are very sensible to try to correct that, in order to get more money off the rich. We need more money off them and less money off people at the other end of the income scale. The way to take less money off people at the other end of that scale is to take them out of tax altogether, and good progress is being made in that regard.

I agree with my hon. Friend the Member for Dover (Charlie Elphicke), who has not stayed for the rest of the debate but who wisely said that it was more sensible to let people keep the money they earn at the low income levels rather than taking it off them through an expensive tax system and then giving it back through an expensive benefits system; by definition, they get back less overall, because we have to charge them a handling charge, as the rich will not pay all the money we need—they pay only quite a bit of it—and so we also have to tax the poor in order to give them benefits, and that can be silly.

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[Andrew George]

I agree with that point and congratulate in particular the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb) on advocating that for many years. He must be pleased. Indeed, I am pleased for him and it is appropriate that that policy is being rolled out. I hope that it will help to iron out the difficulties faced by a lot of people. Having said that, let us see whether it addresses those issues, as I hope it will, when it is rolled out.

If we look back at the principles set out by the Chancellor in the first emergency Budget, we will see that we were clearly told that we were all in it together, that those with the broadest shoulders would bear the greatest burden and that the vulnerable would be protected. Those are the principles against which we must measure the Government. We all have different views on where the lines should be drawn with regard to achieving those objectives, and that is where we get into specifics such as those in the Bill.

It would be a kamikaze mission for me to begin a debate—I am only seven minutes into my speech—by asking my hon. Friend the Minister, for whom I have the highest respect this: what on earth does he know about benefits? He is highly regarded in that sphere. He is respected considerably by people and, indeed, by his political opponents—and rightly so—for what he has achieved. I think we would have ended up with something a great deal worse had he not been in his position.

[Helen Goodman]

Before the hon. Gentleman began on his paean of praise for the Minister, I thought he was making a very good case about the situation in west Cornwall and the difficulties faced by people on the margins of the labour market. That being so, when it comes to the vote will he and his colleagues who tabled amendment 10 vote against clause stand part?

[Andrew George]

I am sure that my right hon. and hon. Friends will make up their own minds on that issue. I do not speak for them, but I have made it clear that I will vote against the Bill as it stands, because I do not think it addresses the fundamental concerns that I have enunciated elsewhere.

To return to congratulating my hon. Friend the Minister on his achievements, my beloved coalition colleagues may not like what I am about to say—[Hon. Members: “Don’t say it!”] Having listened to what has been articulated by those in the Conservative party in recent months, we have to acknowledge what would have happened had my hon. Friend and, indeed, the Liberal Democrats not been in the coalition Government. First, we have to question whether we would have had the increase in the personal tax allowance, on which I congratulate the coalition Government. The Conservatives made it quite clear that they wished not only to freeze benefits altogether but to do so for six years, so we would not even be getting a 1% rise. There would have been a wider impact on pensioners and the disabled, which would have been significant. Child benefit would have been constrained, as well as being cut from families with more than two children.

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Thinking back to the awful events that the Prime Minister was describing in this House a few hours ago before this debate, if the Ministry of Defence ever committed itself to a course of action without some sense of a contingency there would be great criticism from across the political spectrum. As drafted—which is why the amendment is so important—the Bill will commit the Government, and beyond what can be the lifetime of this Government and this Parliament, to a course of action for which there is no contingency. That is not a social, political or economic blank cheque that those of us who put our name to this amendment, and who will vote for it, wish to extend.

[Helen Goodman]

It is a great pleasure to follow the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy), who made some telling points about the problems with the Bill.

I rise to speak in support of amendment 12, moved by my right hon. Friend the Member for East Ham (Stephen Timms). The proposals to cut the real income of the poorest are ugly and unjust. I am pleased that the Secretary of State is in his place on the Front Bench. He frequently parades his Christian beliefs, so I shall begin by quoting from the Churches Regional Commission report, “Am I My Brother’s Keeper?”, which states that the switch in indexation

“represents an on-going erosion…effectively ratcheting up poverty long into the future.”

By 2015, the effect of 1% indexation compared with indexation in line with the CPI to a person on JSA or ESA will be a loss of £156 a year; that is a 4% cut in real terms for those least able to afford it. If the Office for Budget Responsibility’s inflation forecast is wrong, the situation could be even worse.

As we consider the Bill we need to look across at all the changes that the Government are making—we cannot look at this measure in isolation. To see the impact it will have on people, we need to look across the board. I now receive a lot of correspondence from constituents on ESA, who are particularly badly hit. I want to tell the House about one person. Her £66 a week rent is paid by housing benefit. In April, her benefit will go up to £71.70. Out of that, she pays £10 a week for electricity, and £6 a week for water rates. Like many of my constituents, she still uses coal for heating, and three bags of coal—just to inform the Minister, because I do not suppose he is up with coal prices—will cost her £19.50 a week. Her return bus fare to the town—she lives in a village—is £4 a week, and her bedroom tax is £9.24 a week. All of that will leave her with £22.96 for food, cleaning, all household goods and clothes. I submit that even the hon. Member for Gloucester (Richard Graham) could not live on £22.96 a week. If he actually considered the sums of money that ordinary people will be expected to live on, he would understand the outrage we on this side of the House feel at the continuous erosion of the social security net.

[Richard Graham]

I am grateful to the hon. Lady for giving way after her passionate outburst. Yes, of course I share her concern about people on not very much money. My issue with the speech made by the hon. Member for Chesterfield (Toby Perkins) was his assumption that we were talking about people earning £35,000 a year. I do not think he understands that the average wage in my constituency is less than £25,000. We are talking about young nurses—people whose salaries are capped and who are seeing people on benefits get significantly larger increases. That is the issue at stake this evening.

[Helen Goodman]

I am sorry, but the hon. Gentleman evidently does not understand the Bill. He evidently does not understand that people on those low wages will also lose out through the cuts to working tax credits and housing benefit. In fact, the whole point about the Government’s strategic, political mistake is that more people in work will lose out from the Bill than those who do not work. Furthermore—if he will allow me to do a little more arithmetic for him—a person currently on ESA will get a 70p increase in April, but a person earning £25,000 and receiving a 1% increase will get a £5 a week increase. Can he not understand that 70p is quite a lot less than £5?

[Richard Graham]

rose—

[Helen Goodman]

I am not going to give way to the hon. Gentleman again, because other Members want to speak.

I want to address the Minister. When, in the previous Parliament, we introduced the Bill that became the Child Poverty Act 2010, he gave a great deal of evidence from the Family Budgeting Unit in York and the people at Loughborough about the minimum income standard—the minimum income guarantee. He said that what the Labour Government were doing was absolutely shameful and that benefits were not high enough. Now, however, we see that he is prepared to cut benefits in a way that we never did. The testimony to the great success of this Government’s benefit policy is the expansion in the number of food banks: in Durham last year, the food bank fed 4,455 people, of whom 1,390 were children. That is utterly shameful. To demonstrate that it is not possible to live on £22.96 a week, I am going to try to do so during the February recess. Neither I nor, I believe, any other hon. Member seriously believes that they could live on £22.96 a week. We have to look at this in context.

The Bill is unjust because it is simply not fair in the treatment of people in work and those out of work, and the treatment of people on high incomes and people on low incomes. When the dole was introduced in 1912, it was approximately a fifth of average earnings, and so it stayed until 1979, as the hon. Member for Brighton, Pavilion (Caroline Lucas) said. By 1989, it was 15.8% of average earnings; by 1997, according to the House of Commons Library, it was 13.2%; and by 2015, it will be 11.1%. It is absolutely clear that the Government are trying to take it back to the very lowest point at the very bottom of the recession, irrespective of the impact on people’s normal standards of living. Everything the Prime Minister has said about those with the broadest shoulders bearing the biggest burden is seen to be utterly empty and fallacious when the Government introduce such a Bill.

There has been an ugly attempt to divide the poor between the “deserving” and the “undeserving”—taking us back to the 19th century—between sheep and goats, between strivers and shirkers, and between with those with their curtains closed and those with their curtains open. In my constituency, if people’s curtains are closed at 9 o’clock in the morning, it is probably because they are on nights and they are trying to catch up with their sleep. The Churches Regional Commission states that

“of all the words to describe those who depend on welfare, “feckless” has to be the one that rankles most.”

This attempt to divide has failed, however, on the factual ground that two thirds of those affected by the Bill are in work. The housing benefit and tax credit changes will affect far more people.

The right hon. Member for Wokingham (Mr Redwood), who unfortunately is no longer present, tried to tell us that these changes will improve work incentives. As the noble Lord Freud said in the other House,

“there is an inevitable trade-off between the level of benefits and incentives to work. Raising benefit levels would undoubtedly hamper the work-incentive”.—[Official Report, House of Lords, 13 October 2011; Vol. 730, c. GC498.]

Obviously, that is setting to one side the fact that in order to work harder the poor must be made poorer, but the rich can be made richer.

Let us look at the impact of the changes and the context. In my constituency, 7,200 people will lose out as a result of the Bill, by an average of £500; that will take £3.5 million out of the local economy. If the International Monetary Fund is correct, the second round effect will be even greater, at £4.5 million, so the net upshot is an £8 million loss to the economy of my constituency. It is no wonder shops are closing and small business are folding. That is absolutely illogical, and it goes against what the Chancellor of the Exchequer said about the need to let the fiscal stabilisers work.

[Andrew Bridgen]

The hon. Lady talks of her concern for the poor, and it is shared by right hon. and hon. Members on the Government Benches. The problem is that every time her party gets into office, its policies create more of them. Can she explain why the number of adults out of work for more than 24 months doubled in Labour’s last term in office?

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[Helen Goodman]

Yes, I can. It is absolutely obvious: we were in the middle of a very deep recession, which the hon. Gentleman seems conveniently to have forgotten. Of course the number of unemployed people has gone up, but the previous Labour Government helped all sorts of other people back into work—365,000 lone parents, for example. If he would care to look at a map of where incapacity benefit and ESA claimants live, he will see that it looks like a map charting the industrial revolution in the 18th century. Those benefit costs clearly reflect the overhanging legacy of the decline of heavy industry. It is totally unreasonable and unfair to punish the people who happened to work in heavy industry.

Once again, we come to the issue of unemployment. We in the north-east have the highest rate of unemployment in the entire country—9.9%. We have seven people chasing every job vacancy. Whether the gap between the increase for a person on £25,000 a year and the increase for a person on JSA is £4.30 or £4.20 will make no material difference to people’s capability or willingness to find a job, which is why we need a completely different approach to job creation. My constituents want to go back to work.

[Richard Graham]

Will the hon. Lady give way?

[Helen Goodman]

No, I will not. The hon. Gentleman will have a chance to make his own speech. Many hon. Members have given way to him in the course of the debate.

The Chancellor of the Exchequer has broken another promise he made in 2011. He said:

“I also want to protect… those who, through no fault of their own, have lost jobs and are trying to find work”.—[Official Report, 29 November 2011; Vol. 536, c. 802.]

He is patently failing to protect those people. By definition, people on statutory sick pay, statutory maternity pay, statutory paternity pay or statutory adoption pay are not going out to work, but they, too, are seeing their incomes fall, and that is at a time when they have new children coming into the family and need more support.

[Mr Marcus Jones]

The hon. Lady talks about the difficult decisions the Government are having to make, but she does not acknowledge the fact that from the time the Government came into office to 2016, the child element of working tax credit will actually go up by £470 in cash terms.

[Helen Goodman]

The hon. Gentleman is absolutely right, but the point I am trying to make is that we have to look at the cumulative impact of all the changes. If he looks at the tax and benefits micro-simulation model produced by Her Majesty’s Treasury, he will see that everybody in the bottom half of the distribution is a loser, but those people between 50% and 80% in the distribution are gainers. Therefore, he can understand that although the change to child tax credit—we will discuss it under the next group of amendments—might be very welcome, it is not doing the business because of the severity of the Government’s other reductions.

The hon. Gentleman has raised the issue of child poverty, and there is one specific question I wish to ask the Minister and that I hope—

[Steve Webb]

rose—

[Helen Goodman]

Let me ask the question before trying to answer it. We have heard that the IFS has estimated that by 2015 the number of children in relative poverty will increase by 400,000. Furthermore, the Bill will push another 200,000 children into relative poverty. The Minister knows that we had four measures in the Child Poverty Act 2010. What will be the increase over the life of this Parliament in the number of children living in absolute poverty?

[Steve Webb]

I will respond very fully on the issue of child poverty, which a number of hon. Members have raised. I wanted to ask the hon. Lady about the point she made about incapacity benefit. She said that if we look across Britain, we will see that incapacity benefit is highest in all the industrial heartlands. I hesitate to bring her back to the Bill, but is she aware that we are actually proposing to increase the main rate of incapacity benefit fully in line with inflation?

[Helen Goodman]

Yes, but the hon. Gentleman knows that his own impact assessment demonstrates that the Government’s claim that they would protect all people with disabilities is not accurate. I am disappointed that he did not answer my question about child poverty. I do not know whether that is because he does not know the answer or because he is ashamed of it. Perhaps he can explain when he winds up the debate.

[Mr Reid]

I want to speak in support of amendment 10, to which I am a signatory. It is important to set the debate in context. In 2010, the Government inherited an economic mess from the previous Government, including a huge budget deficit, which is why difficult decisions have to be taken. It is important to remind the Committee that just before the previous Government left office, for every £3 they raised, they were spending £4, so borrowing was going up and up. It was interesting to listen to the opening remarks of the right hon. Member for East Ham (Stephen Timms). There was a lot of sound and fury, but little actual policy. In fact, Labour’s amendment would replace the 1% in the Bill with a blank space. Labour does not seem to have any policy at all. His remarks seemed to indicate that the policy, whatever it is, would cost a lot. I think that Labour’s policy of borrow and spend is still in place.

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[Mr Bain]

I would welcome any measures from any tier of Government that would increase the level of training and skills provided to my constituents and those in other Scottish constituencies. I have to say to the hon. Lady, however, that I have two major colleges in my constituency—North Glasgow college and John Wheatley college—which have seen staggering levels of cuts introduced by the Scottish Government. That is driving more young people in my constituency into unemployment and creating the very figures that allow those on the Treasury Bench to produce measures such as those in clause 1.

Even in constituencies such as mine, it is still the case that people move in and out of unemployment. The calculated framing of this debate by the Government, based on the fabricated and manufactured premise that there is a monolithic army of the permanently idle, unwilling even to open their curtains, and defrauding the system, wilfully ignores that fact. Fraud in the benefit system is only 0.7%, and many unemployed people, including many of my constituents, are struggling hugely on just £71.40 a week. Unemployment benefit as a proportion of average income has fallen from 22% in 1979 to a mere 15% now, so the argument from those on the Treasury Bench that unemployment benefit is somehow unaffordable and that it cannot continue into the decades to come is simply a false premise to put to the Committee tonight.

[Helen Goodman]

Would my hon. Friend like to point out to Government Members that, in the days when jobseeker’s allowance and its predecessors represented a higher proportion of earnings than now, we also had lower unemployment?

[Mr Bain]

That is absolutely right. We also had lower levels of long-term unemployment than we have now. As I and other Members have pointed out, high levels of long-term unemployment decrease the earnings potential of the people afflicted by that social evil.

Only today, the Joseph Rowntree Foundation published a survey of poverty in Scotland which revealed that a baby boy born in the richest 10% of Scottish neighbourhoods has a life expectancy 14 years higher than that of a baby boy born in the poorest 10% of such neighbourhoods. Having a 4% real-terms cut in unemployment and other out-of-work benefits of the sort contained in clause 1 is going to make those figures in Scotland even worse. I urge the Government to think again, to accept amendment 12 and to reduce the terrible social damage that will be caused if this measure becomes law.

I hope that, at this eleventh hour, the Government will decide to make policy on the basis of evidence, rather than reintroduce some Victorian distinction between the deserving and the undeserving poor. I urge them to think again about the impact that clause 1 will have, ensuring that 90% of those in out-of-work benefits will, according to the Institute for Fiscal Studies, be an average of £215 a year worse off. They should consider the effect that will have not just on high streets in our towns, villages and cities but on the local shop. They should think about the amount of economic demand that will be taken out of local communities, the jobs that will go as a result of the passing of this measure in this form tonight.

The Government ignore the inconvenient truth that out-of-work benefits constitute just 3% of the welfare budget, and that outside of pensions, most welfare spending ensures that work pays for many of our citizens. Nearly three in 10 of my constituents earn less than the living wage of £7.45 an hour. Although introducing a living wage in those parts of the economy where it will work would save money in lower tax credit costs, we, like many other countries, need a strong tax credit system to reduce imbalances within the labour market that would otherwise cause unacceptable levels of inequality. The simple truth is that most poverty in Britain today is among the working poor. It is mainly the working poor who are losing out as a result of these measures. They will be the biggest victims if this iniquitous Bill were to become law, with a real-terms 4% cut in their living standards.

In Scotland, as a result of these measures, some 261,000 working families, nearly one in five, would lose an average of £259 a year by 2015—the antithesis of work paying for those 261,000. About 70% of the tax credit cuts will affect working families in Scotland. The median wage in my constituency is less than £17,600 a year, and many thousands of people will be savagely hurt by clause 1, as Citizens Advice outlined in its submission. A couple on just £13,000 with two children will lose nearly 5% of their income as a result of this Bill, completely overwhelming any benefit from increasing personal tax allowances, which is worth just 13p a week to them.

This debate is not just about the measure before us; it is a debate about the values of this Government and the priorities of our society. This Bill impoverishes the poor, without reducing the deficit; it makes inequality worse, adding 200,000 to the child poverty figures, leaving 1 million more children in poverty by 2020. This clause is a provision that will cause enormous hardship to some of the poorest people in society, and it will devastate economic demand in constituencies such as mine. I urge the Committee to endorse amendment 12 and to vote against clause 1.

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[Kwasi Kwarteng]

It is not only fair, but common sense. The Labour cash merry-go-round, when Labour was taxing people with very low earnings and then handing back the money in the form of benefits, did not provide a sustainable model. The measures that we have introduced have been far more effective in reducing—[Interruption.] I wish I could share the joke, but I have more important matters with which to deal.

[Helen Goodman]

The hon. Gentleman can share the joke. I was just wondering whether he was going to tell the House that the banking collapse had been caused by working tax credit.

[Kwasi Kwarteng]

I have my own ideas about the banking collapse, which I am happy to share with the hon. Lady—although not, perhaps, tonight.

The financial crisis, which we all remember, devastated everyone. Even today, the United Kingdom economy is 3% smaller than it was in 2008. I cannot speak for everyone in the country, but the vast majority of people are much less well-off than they were in those days. What has happened to benefits since then? According to the figures that we have heard, they have increased by 20% while the earnings of people in work have risen by 10%. That is not fair.

Labour Members have talked of fairness. For instance, the hon. Member for Chesterfield argued eloquently that 1% on £70 a week was very different from 1% on £35,000 a year. However, it is not the people on £35,000 a year about whom we are worried; it is the people on very low incomes. People in my constituency who do night shifts at Heathrow come to me and ask “Why did out-of-work benefits rise by 5% last year? I earn £11,000 a year if I am lucky and work 20 hours a week, but I was not given such a big increase.” That is the sort of fairness that we are talking about. This is a really important issue, which Opposition Members have not addressed in any way.

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[Steve Webb]

I will not give way; I would like to respond to what has been said in the past four hours before taking further interventions.

A number of my hon. Friends asked perfectly reasonably about why we needed to set out in legislation exactly where we were going. We all want our constituents to continue to enjoy, for example, the low mortgage rates that are absolutely crucial to their standard of living. We all know that for those of our constituents in the position of owning their own homes, the mortgage is their biggest single outgoing by a long way. It is vital, therefore, that we keep interest rates under control.

[Helen Goodman]

Not at the moment, it’s not.

[Steve Webb]

But that is kind of the point—not at the moment, because we have kept interest rates under control.

Why is that necessary? Let me share what the International Monetary Fund’s “World Economic Outlook” said as recently as October 2012:

“To anchor market expectations, policymakers need to specify adequately detailed medium-term plans for lowering debt ratios, which must be backed by binding legislation”.

That is the important point. Were we to go year by year, seeing how it went, we would not have the credibility of deficit reduction to which all of us who signed up to the coalition agreement are committed.

Likewise, the OECD’s economic outlook said:

“The government’s fiscal policy stance and strong institutions have secured the confidence of financial markets, as evidenced by the near record-low government bond yields.”

In other words, this is for a purpose—the purpose of tackling the vast, sprawling deficit. To give a sense of scale, my hon. Friend the Member for Argyll and Bute (Mr Reid) was absolutely right when he said that in the final year of the previous Labour Government, for every £3 raised in tax, £4 was spent. What did that add up to? We are talking about a Bill and related measures that will eventually save about £3 billion a year. Labour was borrowing £3 billion a week, so we would need, say, 50 of these Bills to tackle just one year of Labour borrowing. That is the scale of the situation. When Labour Members airily take the moral high ground and pretend that there is a free lunch to be had—that we do not have to do this or make all the other cuts, but that somehow the deficit will disappear—we need to remind people that these are Labour cuts tackling Labour’s deficit.

People should not just take my word for it regarding the need to include social security as part of deficit reduction. Clearly, as my right hon. Friend the Member for Wokingham (Mr Redwood) said, this is not comfortable stuff, and it is not something that any of us take any pleasure in. However, the IFS has said this about why social security is part of the mix:

“When cutting public spending dramatically to help reduce an unsustainable budget deficit”—

that is the IFS’s language, not mine—

“it is almost inevitable that spending on benefits and tax credits—which account for 30% of the government’s total budget—will be targeted.”

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[Steve Webb]

It is, I suppose, possible that had Labour won the last election the eurozone crisis might never have happened, and I grant it is possible that world commodity prices might not have gone up. It is possible that all sorts of things might have happened, but in the real world we live in a global economy. Of course things have been more difficult than we expected. That is why we must tackle the situation, not just borrow more money.

Let me offer my hon. Friend the Member for St Ives further reassurance about what will happens if inflation rises—an important issue raised by my hon. Friend the Member for Argyll and Bute. Our right hon. Friend the Secretary of State for Energy and Climate Change is actively seeking to ensure, for example, that low-income constituents get the best energy tariff they can, rather than what they currently pay. Evidence shows that the people most likely to shop around, switch and be online are not on the whole the most vulnerable customers, so we are ensuring that the most vulnerable customers, who may not take advantage of those lower tariffs, get access to them. I believe that will make a real difference.

More broadly, my hon. Friend the Member for St Ives asks what would happen if inflation ran away, but the Government would not sit idly by and watch—we have various measures available to us to respond to that. The OBR’s forecast for CPI is lower for 2015 than it is now. It is, of course, a forecast, but we will not simply let inflation rip. If we do not commit now to firm targets on where we are going, the OBR will not sign them off, they will not appear in our spending plans and the market will not believe us. If the market does not believe us, interest rates will go up as will the mortgages of our constituents who will have less spending power—where?—in the local economy, which is exactly where everybody has said they want to see demand. There is a knock-on effect from all those things, and the failure of the Labour party to suggest an alternative is shocking.

Let me respond to one or two other points raised during the debate. The hon. Member for Gateshead (Ian Mearns) made a point about percentages being meaningless, but as I have said, from a £200 billion budget those percentages make a great deal of difference. My right hon. Friend the Member for Wokingham made some powerful points. He said that we need to keep inflation down—I have given some examples of how we want to do that—and mentioned the need to get jobs going, which we agree with.

The Labour party seems to be saying that if we adopt its policies, somehow the jobs would flow, but what have we heard about that today? Funnily enough, we have heard almost nothing about the whizzo scheme that was so good when Labour tried it in office as a pilot that it never actually saw it through. Somehow the scheme is supposed to find £3.5 billion of savings, but that is fantasy land. It was a fig leaf rushed out over Christmas so that Labour had something to say because it realised it was on the wrong side of the argument.

There has been some discussion of child poverty and it is important to address that issue in the final few minutes of the debate. The Institute for Fiscal Studies has said that when looking at a Government’s impact on child poverty, we should look at their policies in the round. Clearly, the single biggest thing that we will do to tackle child poverty is the universal credit introduced by my right hon. Friend the Secretary of State for Work and Pensions. That is designed to make work pay and to take children and adults out of poverty. As soon as we are able to bring it in—starting later this year, which is a great achievement—we will start to see its impact.

I was asked for predictions about child poverty, but let me point out the paradox that we have published a set of figures that relate to this Government. Those figures show not a rise in child poverty but a fall of 300,000 according to the measure of child poverty that is the key target of the Child Poverty Act 2010. We have not gone round television studios saying, “Aren’t we great, we’ve got child poverty down?”, because the main reason child poverty fell was a recession that meant average incomes fell. It would have been absurd for us to trumpet a triumph on child poverty when children were apparently lifted out of poverty because incomes had fallen. That is perverse.

The hon. Member for Bishop Auckland (Helen Goodman) asked what the figures will be at the end of the Parliament. For a start, there has been a 300,000 improvement, for which we will not claim any credit, and the universal credit policy will help. Of course, taking money off benefits moves things in the other direction, but overall we are moving things in the right direction, not the wrong one.

[Helen Goodman]

As the Minister knows very well, my question was this: what are his figures on absolute poverty?

[Steve Webb]

The hon. Lady will know perfectly well that the Labour Government never forecast poverty rates. She was a Work and Pensions Minister with—if I remember rightly—responsibility for child poverty, and never once forecast poverty rates, but in opposition she suddenly believes that this Government should do so. We will publish the annual figures that show the effects of all our policies and the state of the economy. That is what the public want to see.

Another question that resonates with my hon. Friends in the Liberal Democrats is why we are taking money off poor people and giving it to rich people. That is a summary of what was said. I worked for the IFS for nine years and have the highest regard for it, but, to be clear, when the IFS does its numbers, it does not count almost all the taxes on the rich we have introduced—it cannot, because it uses household surveys, to which the rich do not, on the whole, reply at all, partly because they are too busy salting their money away in Swiss bank accounts. [Interruption.] Not any more—we have tackled Swiss bank accounts to the tune of several billion pounds. We have increased the main rate of capital gains tax to 28%, which is a substantial increase.

The Labour party focuses on the wages of millionaires as if millionaires are those who earn a £1 million wage. However, millionaires on the whole are folk who have capital gains and properties. They pay stamp duty. They try to avoid paying tax, but we have been cracking down on that, and there is a further clampdown on pension tax relief. The vast majority of those gains for the Government are not counted in the IFS figures. The overall impact is that we are taking far more from the rich than Labour ever would have done. I can therefore assure my right hon. and hon. Friends that this is not a question of taking money from the poor when we could take it from the rich. Even the Budget that reduced the higher rate of tax from 50% to 45% raised many times more in other measures. As we have heard during the course of the debate, the 45p rate, which Opposition Members tell us they find morally repugnant, is 5% more than the Labour Government levied in 13 years.

Amendment 12 would create a vacuum instead of a policy. It would give us no credibility in the financial markets and drive up interest rates when we want to keep them low. Amendment 7 would reinstate the RPI, which even the official statistician says is not up to international standards, and cost £2.5 billion a year compared with the Government’s plans. I have no doubt that amendment 10, in the name of my hon. Friend the Member for St Ives, is well-intended, but unfortunately it would tie the Government in to an above-inflation increase in 2015-16. The Liberal Democrats would not choose that as a priority, but I can assure him that the Bill, on top of the decisions the Government have made to prioritise the poor, will mean that benefits will rise in line with earnings over the period since the financial crisis. My hon. Friend wants that through his amendment, and that is what we will deliver through the Bill.

I therefore urge the Committee to reject the amendments and support the Bill.