Welfare Cap

Ian Lavery Excerpts

Wednesday 16th December 2015 Commons Chamber

[The Parliamentary Under-Secretary for Work and Pensions (Mr Shailesh Vara)]

I beg to move,

That, pursuant to the Charter for Budget Responsibility: Summer Budget 2015 update, which was approved by this House on 14 October 2015, under Section 1 of the Budget Responsibility and National Audit Act 2011, this House agrees that the breach of the Welfare Cap in 2016-17, 2017-18, and 2018-19 resulting from the decision not to pursue proposed changes to tax credits, as laid out in the Autumn Statement 2015, is justified and that no further debate will be required in relation to this specific breach.

The motion is about the Government accounting to Parliament and the public for decisions about welfare spending. It is something we on this side of the House take very seriously. That is why in 2013 the Chancellor announced we would be bringing forward a welfare cap to control welfare spending in a way that has never been done before. The cap would be set shortly after each new Parliament and assessed each year by the independent Office for Budget Responsibility. Any breach of the cap requires my Department to come to the House to set out one of three courses of action. The first would be to propose measures to reduce welfare spending to within the level of the cap. The second would be to seek the approval of the House to increase the level of the cap. The third would be to explain why a breach of the cap was justified. The House will be aware that, following the Chancellor’s autumn statement, the cap is forecast not to be met in the short term. The motion seeks agreement that this is justified.

[Ian Lavery (Wansbeck) (Lab)]

Even this early in the debate, the Minister is saying that he is going to justify breaching the cap. Is he not somewhat embarrassed about that?

[Mr Vara]

Not at all. If the hon. Gentleman will give me time, I will explain the justification. He will be aware that there has been a huge amount of debate on this issue, and that the Chancellor has listened.

[Ian Lavery]

I must have missed that.

[Mr Vara]

The hon. Gentleman obviously did.

In making our case, I want to set out the circumstances that have led to this forecast. The cap was initially set in line with the OBR’s March 2014 forecast. In the summer Budget, the Chancellor set a lower welfare cap to help to reflect our move to a lower tax, lower welfare and higher-wage economy. Since then, as part of the autumn statement, the Chancellor took the decision not to pursue proposed changes to tax credits. This will give families longer to adjust as we make work pay and provide better support for people in work.

This change has been possible partly because of improvements in the nation’s finances, including improved tax receipts and lower debt interest payments. These are not free choices, however, and as a result of this change, we will be spending more in the shorter term than had been forecast in the summer Budget. That means that, based on current forecasts, the cap will not be met for the next three years: 2016-17, 2017-18 and 2018-19.

--- Later in debate ---

[Ian Lavery]

The Chancellor stood up and said that he was proud to have these targets set in stone. He tried to set a trap for the Labour party on this issue, but he wanted the benefits cap set in stone. The Minister is now explaining that, for the next two or three years, there is no chance of meeting those targets. Please tell us that you are slightly embarrassed or concerned.

[Madam Deputy Speaker (Natascha Engel)]

Order. I am not embarrassed or concerned. The Minister might be, but I am not.

--- Later in debate ---

[Owen Smith]

I know, okay, the Chancellor: the right hon. Member for Tatton (Mr Osborne), in Cheshire—the Cheshire cat—and given that he is rather like Macavity, rather than the Cheshire cat, I thought that I would give the House a treat. I read that there were no Etonians on the Front Bench among the new intake, and I was worried that the lack of classical education from which the Treasury Bench normally benefits might mean that the Macavity reference went over Ministers’ heads, so I brought a little book with me, and I shall read a section from it. [Interruption.] It is not Mao; it is T.S. Eliot’s collected poems. It gives us Macavity the mystery cat, who is, of course, the Chancellor:

there’s no one like Macavity…

he’s very tall and thin;

You would know him if you saw him, for his eyes are sunken in—

I think that is the 5:2 diet—

He’s outwardly respectable

although

(They say he cheats at cards.)—

I bet he does—

And when the larder’s looted, or the jewel-case is rifled…

He always has an alibi, and one or two to spare:

At whatever time the deed took place—MACAVITY WASN’T THERE!

Macavity is not here today, is he? And the deed that he is ducking, of course, is this embarrassing, humiliating U-turn. The cap has been breached, and the Government have done it, of course, because of the spectacular, screeching U-turn on tax credits.

[Ian Lavery]

If my hon. Friend—he is a really good friend of mine—had done what the Chancellor has done in promising that the welfare cap would not be breached, would he have sat there and done nothing? I am sure that he would have been prepared to stand at the Dispatch Box, have the courage of his convictions and perhaps apologise.

[Owen Smith]

I would have been mortified had I been the Chancellor responsible for such a terrible U-turn and such an extraordinary, humiliating, screeching U-turn.

--- Later in debate ---

[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.

[Ian Lavery]

The real issue concerns in-work benefits and people who are in work. The Sports Direct model is failing, but the Conservatives are not prepared to get stuck into the likes of Sports Direct and of Mike Ashley. They believe that that is a fantastic model of employment, but it is not acceptable.