Welfare Reform and Work Bill

Ian Lavery Excerpts

Tuesday 27th October 2015 Commons Chamber

[Owen Smith]

Indeed they should. I cannot understand how on earth even this Chancellor, who is pretty slipshod on occasion when it comes to analysing the impact of his measures, can have allowed this one to slip through the net. A pasty tax and a caravan tax maybe, but a £4.4 billion hit on the very workers he purports to support is truly extraordinary.

Let us look beyond the statistics for a moment. On Friday, I was out in my constituency in the village of Beddau, a former pit village at the heart of Pontypridd. Entirely by chance, I met a young woman called Kirsten who was bringing her daughter Maisie home from school. Kirsten is a nursery manager in a small private-run nursery just outside the village. She works 21 hours a week. They are all the hours available, as the nursery is open only in the morning and she works all five mornings. She then brings her daughter home from school and looks after her. She earns £611 a month. That is what she earns from her 21 hours of work at £8 an hour. That is well above the minimum wage and well above the new minimum wage we will see next year. She is set to lose £1,300 of her £7,000 earnings as a result of the cuts. That is an enormous drop for her to contemplate. She said to me that she simply did not know how she would manage. She did not understand how, without the £128 she receives in tax credits each month, she will be able to make ends meet.

I sat down with Kirsten and talked through what she needs to pay out for each month: the housing association three-bedroom house she lives in, council tax, insurance, and running her car to get back and forth to the nursery and to pick up her child. There is nothing left over. The £128 she spends from the tax credits she rightly receives pays for food, new clothes and her child’s books for school. It is just beyond the ken of ordinary people that the Government could be asking them to pay the price for the bankers’ recession, which has led to the crisis in our economy and a Tory Government cutting the incomes of working people.

[Ian Lavery (Wansbeck) (Lab)]

Does my hon. Friend agree, when the issue of family tax credits is all boiled down and the arguments have been fine-tuned, that this is simply an ideological attack by the Government on the lowest paid in our communities? Does he agree with the Institute for Fiscal Studies, which says that low-paid people are being specifically targeted?

[Owen Smith]

I completely agree. It is extraordinary for the Government to describe tax credits as “a bribe”. That is how successive Ministers, including the missing Secretary of State for Work and Pensions, have gone out of their way to describe tax credits for working people. They do not talk about protecting pensioners’ benefits as a bribe by the Conservative party to pensioners—and I would never say that; it is entirely just to protect pensioners’ benefits. By describing tax credits as a bribe, they are even seeking to demonise working people on low and middle incomes who are doing the right thing. That is entirely wrong.

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[Owen Smith]

The hon. Gentleman could, of course, start by deciding not to do what the Government did this week when they offered an inheritance tax cut for properties worth more than £1 million. That would provide about £1 billion. He could decide to reverse the 50p tax rate cut for millionaires; that would provide another £3 billion. He could choose to do what the Chancellor has already chosen to do in the past, and delay the point at which the Government get the budget into surplus. He has moved the goalposts once; why does he not do it again? He is very good at it. He has practised. He has already had one crack at it.

[Ian Lavery]

My hon. Friend has been asked numerous times what the Labour party would do about the £4.2 billion. Will he now explain, categorically and in the simplest terms, that we would not do what the Government are doing, which is taking £4.2 billion from the lowest paid in society? People are losing £1,300 a year, and 200,000 kids are being pushed into poverty. That is not what we are going to do.

[Owen Smith]

I am delighted to say that I agree 100% with my hon. Friend. Let me be really clear: our view today is that the Government should repeal these measures. Our view is that it is wrong to seek to balance the books, in this or any country, on the back of the working poor—those with low and middle incomes who are doing the right thing. This is the wrong thing to do, and we will not do it.

Let me end by reflecting a little on what this whole unedifying spectacle means for the public, and to the public. I think we can agree that politics has been held in pretty low esteem in this country in recent years. People feel that we, as a political class, are not straight with them. They feel that we do not keep our word, or say what we mean.

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[Damian Hinds]

People who are in the work-related activity group are, by definition, people who are to be helped to move closer to the labour market. What I have said in the list of exemptions that I have read out is that the amounts that are specific to the additional costs of disability are protected, which is something that we discussed in Committee.

[Ian Lavery]

rose—

[Damian Hinds]

If the hon. Gentleman will forgive me, I will not give way, because it is 3.2 pm and I need to stop by 3.5 pm.

Amendments 53 and 55 seek to remove clauses 11 and 12 from the Bill, and amendment 54 seeks to retain the payment of the family element of child tax credit for all persons who are responsible for a child or a qualifying young person born before 6 April 2022.

The Government want to ensure that the system is fair both to those who pay for it and to those who benefit from it. Currently, the benefit system adjusts automatically to family size, but many families who are only in receipt of income from work would not see their budgets flex in the same way when they have more children. The Government want to encourage those families who are in receipt of benefits to make the same financial choice about the number of children they have as those families who are supporting themselves solely through income from work.

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[Ian Lavery]

I am not sure whether my hon. Friend was present about an hour ago, when the Minister suggested that it was a good idea for people in the work-related activity group to lose 30% of their benefits so as to move them nearer to employment. How ridiculous is that?

[Debbie Abrahams]

I entirely agree with my hon. Friend. In fact, I am going to move on to a section specifically concerned with incentivising work and how on earth people with, for example, progressive conditions can be incentivised.

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[Debbie Abrahams]

I appreciate that it is strong language, but I can only provide the hon. Gentleman with the evidence. In 2010, the use of the term “scrounger” by the mainstream press had increased by more than 330%, and it has remained at that level. We should always be mindful of the language that we use as leaders, and of how it is perpetuated.

[Ian Lavery]

May I advise my hon. Friend not to take any lectures from the team opposite when they are asking her to calm down in respect of her language against the disabled? Constantly, for the last five years, they have attacked disabled people, poor people and lower-paid people. No apologies are required.

[Debbie Abrahams]

I used that language to draw attention to the issue in the House, and more widely. I did so partly because I am sure I am not the only one to remember the autumn statement two or three years ago in which the Chancellor, at the Dispatch Box, referred to “closed curtains” when people were going out to work. It was quite clear what that implied. I use such language very carefully, and I repeat that its use in the media has increased by 330%. We all have a responsibility in this regard, including the country’s leaders.

The innuendo is that people with a disability or illness might be faking it or feckless. That is grotesque. As a former public health consultant, I speak with some knowledge. It is recognised that incapacity benefit and ESA are good population health indicators, and the release of the Government’s own data has proved the point. Disabled people in the ESA WRAG are a vulnerable group who need our care and support, and not our humiliation.

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[Priti Patel]

I beg to move, That the Bill be now read the Third time.

The Bill, alongside other measures, including the national living wage and the increase in the personal allowance for income tax, will ensure that the welfare system is fair to taxpayers while supporting the most vulnerable. It will help ensure that work always pays more than life on benefits. It will continue to build an economy based on higher pay, lower taxes and lower welfare.

[Ian Lavery]

As a result of these measures, people receiving family tax credits will lose up to £1,300 per annum and 200,000 more children will be pushed into poverty. Can the Minister explain how that is fair?

[Priti Patel]

I thank the hon. Gentleman for giving me the opportunity to respond once again on that issue and to make the case that, first, it pays to be in work, and secondly, through our package of measures, including the national living wage, the increase in the personal allowance and the extra support for tax-free childcare, families will be supported through the changes we are making. That contrasts with the system we inherited from Labour in 2010, which was not fair to the hard-working taxpayers who paid for it, and certainly did not support people trapped in a system of welfare, with no hope for a brighter future. That is why we are continuing to reform welfare so that work pays in the United Kingdom.

After 13 years in government, Labour left a welfare system that failed to reward work. Between 1997 and 2010, spending on tax credits increased by 335%, compared with an increase in average earnings of just 30% over the same period. Despite all the spending, 1.4 million people spent most of the last decade under Labour trapped in out-of-work benefits. [Interruption.] That is not a ridiculous point to make. Over the same period, the number of households in which no member had ever worked nearly doubled and in-work poverty rose, yet Labour has opposed every decision we have taken to fix the welfare system and support people off welfare and into work.

Our welfare reforms are focused on transforming lives by helping people to find and keep work. We are focused on boosting employment and ensuring fairness and affordability, while supporting the most vulnerable, and on making sure that people on benefits face the same choices as those not on benefits and in work. Over the past five years, 2 million more people have entered employment, while 2.3 million people are now in apprenticeships and the number of workless households is at a record low—down by more than 680,000 since 2010. This was achieved in the last Parliament, when welfare spending increased at the lowest rate since the creation of the modern welfare system.