Living Standards

Helen Jones Excerpts

Monday 5th March 2012 Commons Chamber

[Rachel Reeves]

The hon. Lady has had her chance; I will carry on.

When it comes to child benefits, a Government who say that they believe in rewarding work are creating a perverse and damaging incentive for people near the higher-rate tax threshold to limit their hours or pay, because of the crude cliff-edge effect that their policies will create. At the same time, changes to the rules for working tax credits will mean that some families could end up £728 better off on benefits than in work, according to a written answer from the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling).

[Helen Jones (Warrington North) (Lab)]

The Chancellor said when he took office that he did not intend to balance the books on the backs of the poor. Is that not now exactly what he is intending—and failing—to do? That is the real answer to the hon. Member for Broxtowe (Anna Soubry).

[Rachel Reeves]

It is even worse than that, because the Chancellor is not even balancing the books.

--- Later in debate ---

[Mr Gauke]

I shall speak in greater detail about the reforms to the working tax credit in a moment, but there is a question that we all have to answer. As the hon. Lady knows, there is a threshold for claiming the credit. For lone parents, it is 16 hours a week. We think it entirely reasonable that the joint target for couples should be not 16 hours a week but 24; we believe that that incentive will be helpful. The principle of a threshold has been in the tax credit system since it was put in place.

[Helen Jones]

rose—

[Joan Walley]

rose—

--- Later in debate ---

[Helen Jones]

Given that the Chartered Institute of Personnel and Development says that one in five firms are cutting hours, rather than increasing them or creating new jobs, how are people who work 16 hours a week going to find the extra hours to qualify for working tax credit? Where are those hours going to come from?

[Mr Gauke]

The figures for the last quarter for which figures are available show that there were more than 1.1 million jobs—[Interruption.] That is not a net number; it is the gross number of people moving into employment. We are not going to do anything for employment in this country if we undermine credibility, or if we see our interest rates driven up because we lack credibility because our policies do not hang together. That is what Labour is advocating, but it would be bad news for private and public sector employees.

--- Later in debate ---

[Sheila Gilmore]

rose—

[Helen Jones]

rose—

[Stephen Williams]

I have already given way twice and I am on a time limit.

The same arguments apply as when the Government had to take tough decisions on whether to raise out-of-work benefits in the comprehensive spending review and the last autumn statement, and those benefits were raised by the high consumer prices index of 5.2%. Child tax credits have also been raised by 5.2%; that is £135 extra this year. As the Minister said earlier, there has been £390 extra cumulatively so far since the general election. Difficult decisions are being taken on the reform of tax credits. The Liberal Democrat manifesto explicitly said that we thought there was scope for the reform of poorly focused tax credits. In 2010, nine out of 10 families with children received tax credits and, even after the difficult reforms we are introducing in these tough fiscal times, six out of 10 families will still receive tax credits.

Child benefit is another area in which the Government have to make a tough choice. If the Labour party’s message is that it opposes even that tough choice of withdrawing child benefit from the richest families in the country, where on earth is it going to find the cuts? I look forward to hearing, in all the Labour speeches between now and 10 o’clock, what alternative cuts would be made to replace that cut in child benefit. The cliff edge of the higher rate tax threshold is difficult. We all acknowledge the anomaly that was expressed in the extreme by the hon. Member for Wansbeck (Ian Lavery) regarding the earnings of two people in a household. The Deputy Prime Minister confirmed this morning that we are looking for ways to smooth that withdrawal of benefit from those who are marginally over the threshold; we will have to wait until the Budget to see the outcome of those discussions.

The Government are introducing other measures to support families with children. This morning, I visited a secondary school in my constituency, St Mary Redcliffe, and on Friday I visited the City academy in my constituency as well. Both those schools and all the other schools in all our constituencies are benefiting from the introduction of the pupil premium. Parents who are working need support with child care, and the Government are introducing 130,000 extra places for two-year-olds.

At least this motion mentions pensioners. The last time we had an Opposition motion on living standards, it neglected to mention pensioners at all. That was hardly surprising because the Government had just announced the largest cash increase in the state pension since it was introduced by Lloyd George and Asquith in 1908. The Government have a triple lock in place to ensure that pensioners always receive an increase. We will not have the embarrassment of 75p pension rises in future.

The Government are taking action on tax avoidance. I note that the motion says that everything Labour wishes for, whether on child benefit, child tax credit or working tax credits, is somehow going to be paid for through tax avoidance measures that are unspecified in the motion. That would have more credibility if Labour had voted in favour of the tax avoidance measures introduced by the Government in the last Finance Act, rather than voting against them. I want to see more action on tax avoidance in the Budget, such as a general anti-avoidance rule, and I look forward to hearing what the Chancellor has to say—