Welfare Cap

Jacob Rees-Mogg Excerpts

Wednesday 16th December 2015 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

In the spirit of the season, let me congratulate Tory Front Benchers on recognising the futility of having passed legislation a year ago and now agreeing with the SNP’s position that the benefits cap was wrong.

The breach of the welfare cap prompts the question of what is the point of it if it can be exceeded within its first year. I remind the House that in 2014 the Chancellor of the Exchequer said:

“The welfare cap brings responsibility, accountability and fairness…From now on, any Government who want to spend more on welfare will have to be honest with the public—honest about the costs—and secure the approval of Parliament in order to breach the cap.”—[Official Report, 26 March 2014; Vol. 578, c. 381.]

He will have to eat his own words. To save his blushes, he should abandon this inflexible, unworkable, draconian policy and focus on tackling the root causes of welfare dependency at source.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

The hon. Gentleman knows full well that this is an example of the cap working. The Government have had to explain why they have had to do this, and explain the context of the changes announced in the autumn statement. That is absolutely right and proper, and he should support the Government.

[Ian Blackford]

I am grateful for the hon. Gentleman’s intervention. Of course we will support the Government tonight, but the fact remains that we should not be having this debate because the cap should not have existed in the first place.

We have to recognise that social security protects the poorest and the vulnerable in our society, but we do not do that through these false measures, which is exactly what this is.

--- Later in debate ---

[Marie Rimmer]

No. Hon. Members need to learn that I will not give way until I have had my say. [Interruption.] Yes, the House needs to know what type of woman I am.

We need to shift the balance of expenditure from the cost of failure towards investment. As my hon. Friend the Member for Pontypridd (Owen Smith) has said, the large rise in housing benefit expenditure in the 20 years before the financial crisis came at a time when the number of households receiving help to pay their rent stayed broadly flat. That should have triggered a major focus on those trends and led to serious reform of policy and spending, but it did not. As a consequence, the benefits system was extremely vulnerable to economic shocks, as large numbers of people were in more expensive private rented accommodation. When the crisis really hit in 2010-11—it came a couple of years later—housing benefit shot up, and in response we have seen a series of arbitrary attempts to hack back the costs. We have seen 14 changes to housing benefit, including the bedroom tax, which was entirely unrelated to the causes of the rising expenditure. We need to get down to the policy and the causes.

Ministers are leaning too heavily on the political dividing-line and not enough on designing a cap that would advance structural reforms. Although it is set over five years on a rolling basis, the Government’s cap will bite on an annual basis. With the Office for Budget Responsibility warning about the overshooting of the autumn statement, we call today for compensating action in the next Budget.

We have had emergency cuts, not long-term saving. The cap has been set in nominal cash terms. Higher expenditure, driven by inflation, will trigger policy action, which risks locking in lower living standards for those reliant on benefits. General price rises feeding through into uprating decisions do not count as a structural divide in spending. In line with consumer prices index forecasts for the coming years, the Chancellor set out a margin of error of 2%, which will not trigger action.

The cap makes no distinction between contribution-based and income-based benefit spending, consistent with the drift of social security policy over decades, but they are different, and should be treated as such. Entitlement to contributory benefits, which are financed by national insurance contributions, should stand outside the mainstream of Government revenue and be taken out of the cap, strengthening the integrity of the national insurance fund.

I urge the Government to backtrack on the political ideology-driven trajectory that they are on, with 80% of cuts coming from public spending and welfare and 20% from tax, and with tax cuts being provided to people who do not need them and will not spend the extra money, so it will not go into the economy and will not feature in the drive for more jobs. The Government should invest in proper affordable housing for those who need it. Never mind all these dressed-up schemes—let us have some honesty in this place and address the issues for the public out there. I think the Government are living in a virtual world; it is certainly not the world that I move in.

Question put and agreed to.

Resolved,

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.

Riot Compensation Bill (Money)

Queen’s recommendation signified.

Motion made, and Question proposed,

That, for the purposes of any Act resulting from the Riot Compensation Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act by local policing bodies, by way of compensation for damage, destruction or theft occurring in the course of riots, out of money so provided.—(Mike Penning.)

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

I want to raise the modest question of why this Bill has not been introduced under Standing Order No. 50, as it seems to me that the primary purpose is a charge. For a Bill of this kind, Standing Order No. 50 is the usual process. I know it has the Government’s support, but I am puzzled that that approach has not been taken.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

The hon. Gentleman raises an excellent point, which I am sure has been taken on board by those on the Treasury Bench.

Question put and agreed to.