Tax Credits

Jeremy Lefroy Excerpts

Tuesday 20th October 2015 Commons Chamber

[Jeremy Lefroy (Stafford) (Con)]

Many of those who have spoken, and indeed the Chancellor himself, are quite right to say that we have to view all the measures put forward as a package—not just the effects of the tax credit changes, but the many other measures that have been spoken about. I would like to make three points: on timing, predictability and the concept of scarcity.

On timing, the measures will come in at different times. It is vital that their timing should be synchronised. It is not there at the moment and I therefore ask that the timing of the introduction of the various changes to tax credits be looked at. I fully agree that we need reductions in the tax credit bills, but it is the timing that will bring great problems to many families.

On predictability, families want to know what their income is going to be. They want a reasonable measure of forewarning, so they can talk and negotiate with their employers, and plan their future. If their income is going to be reduced, they need time to do that.

[Barbara Keeley]

The hon. Gentleman is making a good point about timing. I raised a point earlier about carers. Carers who work 16 hours a week on the minimum wage will lose their tax credits. They cannot change that, they cannot plan for that and they cannot find any way out of that. What does the hon. Gentleman think about that in relation to the 689,000 carers?

[Jeremy Lefroy]

The hon. Lady must have read my notes, because I was going to come to that and say precisely that this is the other major issue. Those on fixed incomes do not have the ability to go out and work the two or three extra hours a week to cover the cost of the changes to tax credits. Full-time carers are not the only example, but they are the most obvious. I entirely agree with her.

Scarcity might seem a rather arcane concept to introduce, but studies have shown that for those who find sudden scarcity imposed on them economically, the costs are very great. The inflation rate for people on lower rates of pay is considerably higher than for those on higher rates of pay. If they suddenly receive a lower income—perhaps a cut of 10% or more—their costs will actually rise, because they will be unable to make the decisions to buy in bulk or in advance that they were otherwise able to make.

Finally, I am not one of those who does not want to eliminate the deficit. I absolutely do. If we have a change in timing—as I urge the Government to consider, including in relation to carers—we will need to find extra sources of revenue and we will have to take that on the chin. In particular, I have written to the Treasury to ask it to consider various income tax and corporation tax reliefs.