Welfare Benefits Up-rating Bill

Iain McKenzie Excerpts

Tuesday 8th January 2013 Commons Chamber

[Mr Iain McKenzie (Inverclyde) (Lab)]

The Chancellor intends to take a further £6.7 billion from benefits and tax credits over the next four years by capping the increase in them at 1%. That is a real-terms cut and an additional squeeze on families, because of the Chancellor’s failure to create growth in our economy, and the delivery instead of a double-dip recession. The Government told us that they would bring down borrowing, but they are now borrowing an £212 billion more than planned. The Chancellor claims that he is cracking down on a benefits culture, but hard-working lower and middle-income working families are those hit hardest by the Bill. Many working families need tax credits and benefits to top up their incomes, as without them work really would not pay. Just 23% of the savings come from jobseeker’s allowance, employment and support allowance, and income support—the principal out-of-work benefits. The rest comes from tax credits such as maternity pay, sick pay and housing benefit, all of which are claimed by working people.

Some 60% of people affected by the changes to tax credits and benefits are in work, and one-earner working families could lose as much as £534 per year at a time when more than 6 million people in working households are already in poverty. Levels of long-term unemployment are worryingly high, because the Government have failed to kick-start the economy and their Work programme has failed. Even excluding the 60% of working people affected by the changes, this is hardly the time to start picking on the unemployed. The Government are always prepared to talk about skivers when unemployment is high and they are worried about costs, but never want to do so when job vacancies are relatively numerous and unemployment is low. Surely, if the Government wanted to inconvenience so-called skivers, this is not the time to target them, when large numbers of people are without work and reliant on benefits.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Does the hon. Gentleman agree that the reform will make it more difficult to kick-start the economy? It will remove millions if not billions of pounds from communities up and down the UK, making it harder for people to spend and therefore kick-start the economy.

[Mr McKenzie]

I could not agree more with the hon. Gentleman. The Bill will take many millions out of local economies and have a double kick on the downturn.

Incredibly, the Government take from struggling households and give to millionaires. As I have said, at the same time as the Government are giving tax cuts to millionaires—as we have heard, some cuts are in the region of more than £2,000 per week—the Bill effectively means a permanent reduction in benefits, which could have a devastating effect when a proper safety net is desperately needed by millions of the most vulnerable people in Britain.

It is highly likely that this regressive change will lead to an increase in poverty, especially for those who are already facing a perfect storm of cuts to public services and rising prices. Clearly, the Bill is an attack on hard-working families, who are paying the price for the Government’s economic failure. It is without doubt an attack on striving families. In my Inverclyde constituency, 6,300 families receive working tax credit. They are being asked to pay the price for the Government’s failure, while millionaires—believe it or not—get a tax cut.

In Inverclyde, the number of unemployment claimants means that 15 people chase every vacancy. The Government would suggest they use the Work programme. Where can I start with that? My constituents never hear from the Government where they can start work. The Work programme has delivered less than 1% in my area, which is a disgraceful and pitiful success rate.

The best way to reduce the cost of welfare is to get people back into work. The truth is that the Government’s failure on the economy is pushing the dole bill through the roof. That is why Labour propose real jobs for those who have been out of work for two years or more. Scotland stands to gain most from the introduction of the compulsory jobs guarantee. Long-term unemployment has been rising faster in Scotland than in any other part of the UK.

I shall conclude, because other hon. Members wish to speak in the debate. The welfare bill is going up under this Government—it is a staggering £13.6 billion higher than forecast—because they are failing to get Britain back to work. The Government need to practise fairness, but the Bill fails on fairness and on the economic tests, which is why I will support the amendment.