Universal Credit

Ivan Lewis Excerpts

Tuesday 13th March 2018 Commons Chamber

[Ms McVey]

It would be helpful if hon. Members did not just make up statistics and facts as they went along, as we just heard from the hon. Lady. Hon. Members should listen to us regarding the support that we are now providing to claimants. As I said, it is a topsy-turvy world. There was a ding-dong when the Opposition were calling for the changes. Now that we are introducing the changes, we are back to another ding-dong and they do not want the changes—but never mind.

I turn to the regulations concerning national insurance contributions and childcare. These regulations align the tax and national insurance treatment of employer-supported childcare, where parents opt into the new tax-free childcare scheme. They remove the national insurance disregard to new entrants to the scheme, once the relevant day has been set. They are vital to ensure that the tax system operates fairly and consistently and that the Government can target their childcare support effectively.

For many parents, being able to afford good-quality childcare is essential for them to work and support their families. That is why we are replacing the childcare vouchers with tax-free childcare, which is a fairer and better-targeted system. Tax-free childcare is now open to all eligible parents, who can get up to £2,000 per child per year to help towards their childcare costs. More families will be able to access support through tax-free childcare because only about half of employed working parents can access vouchers, and self-employed parents were excluded from vouchers. Therefore, 1.5 million families are now eligible for tax-free childcare compared with about 600,000 families currently benefiting from vouchers.

[Mr Ivan Lewis (Bury South) (Ind)]

Will the Secretary of State clarify something she said in relation to people getting pay increases that then perversely lead to them being worse off? She appeared to say that she would instruct personal trainers to put that right financially. I can hear a shudder going around benefits offices up and down the country at the idea that she has unilaterally said that if any constituent of ours faces being worse off as a consequence of a pay rise, perversely, her personal trainers will compensate them for that loss.

[Ms McVey]

I thank the hon. Gentleman for that intervention, because it allows me to explain that universal credit works on a tailor-made basis, so that the claimant will always be in contact with their work coaches to work out what is better, how progression would be better and why they would be taking reasonable work because it makes them better off. I am not saying this unilaterally. I ask all Opposition Members please to go to their local jobcentre and meet the work coaches, who can then explain how the system works.

In 2013, the Government announced the introduction of tax-free childcare as the successor to childcare vouchers. The passing of the Children and Families Act 2014, which legislated for tax-free childcare, had cross-party support. Tax-free childcare is now fully rolled out, and the date for the closure of the voucher scheme to new entrants is April this year. This was set out in the 2016 Budget, giving two years’ notice. Parents receiving childcare vouchers can continue to use them while their current employer continues to offer the scheme.

--- Later in debate ---

[Mr Ivan Lewis (Bury South) (Ind)]

The measures that we are debating expose what has been happening to our country since 2010. In the name of deficit reduction and fiscal responsibility, the Tories have allowed the poorest and most vulnerable to become poorer and even more vulnerable. A Prime Minister who once courageously warned her own party that it was perceived by too many as the nasty party is presiding over a Government who have a cavalier disregard for social justice and the poverty that shames our country.

It is true that in the aftermath of a global financial crisis, any UK Government would have had to make tough choices, striking the right balance between spending cuts, tax increases and investment in growth. However, the reality is that too often they have made the wrong choices—choices motivated by an ideological project to wither the state, irrespective of its impact on local communities, the poorest in our society and growth.

[Anna Soubry (Broxtowe) (Con)]

Could the hon. Gentleman just remind us all that a note had been left by a member of his Government that said, quite properly, there was no money left? Not only have this Government restored our economy, but in so doing they have absolutely protected the very people that matter to all of us. This is tribal nonsense.

[Mr Lewis]

I have a lot of respect for the right hon. Lady, but to claim that the financial crisis was anything other than a consequence of a crash that started on Wall Street is the biggest distortion of history that we listen to in this country.

[Anna Soubry]

The hon. Gentleman is rewriting history. The fact is that if the Labour Government had fixed the roof when the sun was shining, when that crisis came along they could have weathered the storm. That is what this responsible Government have been doing since 2010.

[Mr Lewis]

The right hon. Lady’s party wanted us to regulate the banks and the financial services sector less than under the regulatory system we had in place. It committed to matching our spending and borrowing and did not want us to rescue the banks. Imagine if that prescription had been followed at the time we were dealing with the financial crisis.

The Government’s choices are motivated by an ideological project to wither the state, irrespective of its impact. Their disproportionate cuts have choked off growth and destroyed too much of our social fabric. Their tax changes have failed dismally to tackle tax avoidance or to ensure that, in tough times, those with the most carry the greatest burden. Their failure to invest in infrastructure, skills and jobs has led to economic growth that is anaemic compared with similar economies. The Government’s own assessments predict that this economic failure will be made even worse by the uncertainty and instability that are the inevitable consequences of Brexit.

Perhaps the right hon. Lady will agree with me on this point: history will record that the referendum was nothing to do with the national interest or giving voice to the will of the people. It was David Cameron’s fix for managing the Tory party through a general election.

[Anna Soubry]

Will the hon. Gentleman give way?

[Mr Lewis]

I am not giving way again to the right hon. Lady. Far from being the party of economic competence, hers is the party of economic chaos.

To be clear, the policies we are opposing today are neither necessary nor acceptable in a civilised society; they are political choices made by this Tory Government. As we have heard in this debate, Tory Members are in denial. Too many of our fellow citizens might as well be living in a different country from the one they describe. The reality for those people is food banks, perpetual debt, a poor quality of life and a lack of hope for themselves and their children. Some, of course, are dependent on benefits, but increasing numbers are people in work on permanent low pay and insecure contracts. This should offend any Member who believes not only in social justice but in the future of mainstream politics. Here and abroad, people who feel left behind by mainstream politics are increasingly turning to anti-establishment nationalism, which spreads hate and division. That is another reason these policies are so irresponsible.

[Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)]

A few moments ago, the hon. Gentleman denigrated Brexit, yet his own area of Bury voted to leave the EU. How would that have helped with the politics of disenfranchising people and making them turn towards extremes?

[Mr Lewis]

The hon. Gentleman entirely misses the point. Of course I believe that the result of the referendum must be respected; I question the motive for the referendum in the first place. It was David Cameron’s folly—that is how history will remember him—and was done in the interests of the Conservative party, not those of our country.

[Anna Soubry]

I too have respect—some—for the hon. Gentleman, although it is beginning to wane. I do not want to fall out with him, but I would make one point to him. It is not good enough just to blame it all on David Cameron. The hon. Gentleman, like me and the majority of people in the House, walked through the Lobbies in support of a referendum, and we are now dealing with the consequences. We were all complicit in agreeing that the British people should vote and determine whether we stayed or left.

[Mr Lewis]

I simply say—I think that history will bear this out—that it was done purely to keep the Conservative party together and to get through a general election. It had nothing to do with the national interest and everything to do with the arrogance of the then Prime Minister and Chancellor in believing that they would almost inevitably win such a referendum.

I will turn now to the measures on universal credit and free school meals. The Government could hardly have made more of a mess of universal credit. The National Audit Office stated that the project had suffered from

“weak management, ineffective control and poor governance”.

Is that the responsibility of the current Secretary of State or her predecessor? Perhaps she would like to respond—no? Okay. Cuts to universal credit passed in the last two years have left a majority of families worse off on universal credit than under the system it replaces, and this further reduction in support will add to their financial pain. The proposed threshold could have a negative effect on work incentives and risks creating poverty traps for families on universal credit, which goes completely against the Government’s goal that universal credit should always reward work.

In the 1980s, Tory policies created a deeply divided society. They have learnt nothing from history and are once again fuelling a cycle of intergenerational deprivation that hurts those most affected but which in the end damages us all. I hope the House will today force the Government to rethink these regressive measures.