There have been 19 exchanges involving Jeremy Quin and the Department for Work and Pensions
|Mon 4th June 2018||Personal Independence Payments||3 interactions (42 words)|
|Mon 21st May 2018||Oral Answers to Questions||5 interactions (84 words)|
|Mon 26th March 2018||Oral Answers to Questions||3 interactions (30 words)|
|Wed 28th February 2018||Pensions Auto-enrolment (Westminster Hall)||3 interactions (865 words)|
|Thu 8th February 2018||Motability||3 interactions (75 words)|
|Tue 23rd January 2018||Personal Independence Payment||7 interactions (55 words)|
|Mon 22nd January 2018||Private Sector Pensions||3 interactions (40 words)|
|Mon 22nd January 2018||Financial Guidance and Claims Bill [Lords]||3 interactions (1,267 words)|
|Thu 7th December 2017||Financial Inclusion||6 interactions (1,894 words)|
|Tue 24th October 2017||Universal Credit Roll-out||16 interactions (954 words)|
|Wed 18th October 2017||Universal Credit Roll-out||3 interactions (501 words)|
|Tue 28th February 2017||Intergenerational Fairness||3 interactions (76 words)|
|Wed 16th November 2016||Autumn Statement Distributional Analysis, Universal Credit and ESA||7 interactions (92 words)|
|Wed 20th July 2016||Supported Housing: Benefit||3 interactions (63 words)|
|Mon 11th July 2016||Oral Answers to Questions||3 interactions (24 words)|
|Tue 10th May 2016||Universal Credit (Children)||7 interactions (100 words)|
|Mon 20th July 2015||Welfare Reform and Work Bill||7 interactions (648 words)|
|Thu 9th July 2015||Budget Resolutions and Economic Situation||17 interactions (1,247 words)|
|Wed 1st July 2015||Child Poverty||3 interactions (49 words)|
This is a brand new benefit that, for the first time, looks not just at people with physical disabilities, but fundamentally at all the disabilities people have—cognitive, sensory, health and mental health conditions—and supports more people than DLA ever did.
Nobody was forced to come here to explain why I did not appeal the mobility case. I made a decision by myself, which I thought was true and in keeping with how PIP was designed, and I made sure that we did not seek leave to appeal that.
There was a period of uncertainty for the five months between the court case and when the new regulations came into play. I agreed that in the cases of AN and JM, they should not be living in uncertainty. I believe that in both instances, I have done the right thing in not seeking leave to appeal.
I appreciate that the Opposition do not like to hear the fact that we have, I would say, made a positive move by not seeking to appeal and by supporting these extra people. No one would believe it from the screams from the Opposition Benches, but what I have decided to do and what this Government have decided to do is to support disabled people as best we can and to provide this new benefit, which is a personalised, forward-looking benefit, which was not the case with DLA.
My hon. Friend raises several questions about helping disabled people into work. Over the last three years, we have helped more than 600,000 people into work. People will know that PIP is a benefit for those in work and those out of work, and we have helped another 200,000 people in work through PIP. This is what we are about: supporting disabled people who are in work and out of work, and bringing in a more tailored and personalised benefit. What I will say is that if something has gone wrong and if something is not right, we will correct it to make sure that people get the payments they deserve.
The pensions industry can and should make the most of the opportunity presented by FinTech. We believe that if it is to succeed, it will be vital for industry and Government to collaborate in the development of the pensions dashboard. As others countries have shown, pensions dashboards are a fantastic way of giving people access to pension information in a clear and simple form, bringing together an individual’s savings in a single place online.
Well, the question was about Windsor, but the answer was broad and expansive in its scope. The hon. Member for Horsham (Jeremy Quin)—as befits a former constituency chairman of mine—is a keen young fellow, and I think that we should hear from him.
It is true that Windsor is the centre of the universe, and we should all congratulate Prince Harry and Meghan on their marriage at the weekend. It is also true that Windsor, and all parts of the United Kingdom, will benefit from the pensions dashboard. The internet has transformed travel, insurance and other businesses when they have gone online, and we believe that when the pensions industry comes out of the Victorian age and goes online, there will be great progress for everyone.
We have had this debate before, and this has been corrected many times. Actually, 50,000 more children are going to have free school meals. These scaremongering stories are not true at all. Let us look at what is happening. We now have 1 million fewer people in absolute poverty—a record low. We now have 300,000 fewer children in absolute poverty—a new record low. There are also 500,000 fewer working-age adults in absolute poverty—a record low. This Government are about helping people to get into work, which is the first step they can take towards taking control of their life. From there, they can have career progression.
The hon. Gentleman makes an extremely important point very well.
Let me make one further point before I conclude and allow other hon. Members to speak. My hon. Friend the Member for Chippenham appeared to indicate that she supports rates increasing above those that have been set out for April 2019. I absolutely agree: both employees and employers will need to make even greater contributions. It is easy to talk about that in this place, but it is much more difficult to get it across to the businesses and individuals affected, so I would be interested to hear what the Minister has to say about that. He is a brilliant Pensions Minister. I heard him speak in another part of the Palace earlier, and he has an incredibly strong grasp of the detail, which is exactly what we need from Ministers as we get to grips with the challenges of auto-enrolment.
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The situation is being assessed at the moment, and what happened is being investigated. The regulator already has the power to look into anti-avoidance measures and enforcement, which could be utilised to do precisely what the hon. Lady talks about. Strengthening the regulator’s hand was in our manifesto, and we will be bringing that forward in the White Paper.
I do not mean that debt is higher as a proportion of income; I meant that it is higher as a percentage of disposable income, which the Minister will find it is.
The Government need to do three things with the scheme if they are properly to grant the breathing space people need. First, the scheme must be applicable to all relevant debts, including central and local government debt. To take one example, I recently met the organisation Every Child Leaving Care Matters, where I learned about the problems some care leavers face with things such as council tax obligations. After years of having these bills paid for them, they can often find themselves with mounting debt and without the support, including family support, that many of us here take for granted. That is why I was delighted when Labour-led Hull City Council announced recently that nearly 350 youngsters leaving the care system in the city would not have to pay council tax in Hull until they turned 21.
The scheme will be one of the first policies of its kind in the country when it starts next April and could mean that each of these people saves at least £900 a year. That is fantastic news for Hull but unfortunately not for the rest of my constituents in the East Riding of Yorkshire Council. We can end this unacceptable postcode lottery by supporting the Bill today. It is not just care leavers who are affected either—many people owe money to central and local government—and by ensuring that these debts are included in the breathing space scheme we can help care leavers and many others keep their heads above water.
Secondly, the scheme must make sure that the Government’s consultation, while thorough, is carried out as quickly as possible. There is a danger that the words,
“As soon as reasonably practicable”
in clause 8 will allow the Government to drag their feet in deciding whether to introduce this breathing space scheme. That must not be allowed to happen. The Secretary of State must act quickly to make sure that a scheme is put in place and that support is offered to those who need it now.
Thirdly, the scheme must ensure that the breathing space is long enough to provide time for families to stabilise their finances and that support is in place to allow them to pay their debts in a manageable way. It is no use holding back the creditors from the door for a randomly chosen six-week period if, at the end of those six weeks, the family can still not pay. If we are to set a breathing space, we must get the period right.
We must get this right. Not to do so would not be in the interests of our economy, which already struggles with high personal debt; it would not be in the interests of creditors, who, according to statistics from Scotland, collect more of what is owed to them when a payment plan is followed; and it would definitely not be in the interests of the many families in my constituency drowning in an ocean of personal debt. On clauses 7 and 8 at least, the Government find themselves in the rare position of enjoying cross-party support and with a rare opportunity to make my constituents’ lives a little easier. On their behalf, I ask the Minister and the Secretary of State to act quickly and, further to the points made by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) from the Front Bench, to take on board my points and grasp the opportunity being offered to help so many people.
I welcome the chance to speak in this debate. I will make a short speech on a topic that has been touched on by Members on both sides of the House. We seem to agree that the introduction of a duty of care for financial service providers would be a good thing. That is not currently in the Bill, but the Bill gives us a vital opportunity to take steps towards introducing such a duty of care and, in doing so, transforming the support that customers receive from their financial service providers.
As is recognised in the Bill, ensuring that people have access to the right help and advice as soon as possible is essential to stopping financial problems escalating. For people who are ill, or who are considered vulnerable in other ways, it becomes even more important. It is well known that being diagnosed with a health condition such as cancer can come with a huge and sudden financial impact. Research by Macmillan Cancer Support found that four out of five people with cancer are impacted financially by their diagnosis, which makes them, on average, £570 a month worse off. That impact, as one would expect, leaves many people struggling to keep up with their financial commitments.
Banks, building societies and other financial services providers are in a unique position to step in. They could offer short-term measures, such as flexibility on mortgage payments or interest freezes on credit cards and loans, as well as ensuring that customers are signposted early to financial help, which can help them to avoid problem debt. Some banks have made progress on that. For example, Lloyds and Nationwide have worked in partnership with Macmillan to deliver specialist support to customers who are affected by cancer. However, the overall picture is still mixed. Only one in nine people with cancer tell their bank about their diagnosis. Many people do not think that their bank can help them, or, worse, they worry that disclosing their diagnosis will have negative consequences. Of those who did tell their bank, nearly a quarter were dissatisfied with the support they received. That, to me, seems like a huge missed opportunity.
When someone is living with a long-term health condition such as cancer, the last thing they should be worrying about is money. But if people do not feel comfortable accessing support, or the support is not there when they try, their financial worries can quickly escalate. If financial service providers had a legal duty of care towards their customers, people would be given the confidence to disclose their diagnosis, knowing that they could trust their bank to act in their best interests.
For banks and other providers, that would mean being ready to respond to their customers’ needs, and designing the vital products and services that would help people focus on their health. Of course, the duty would not just help people with cancer. It would have wide-ranging benefits because it would ensure that the banking sector played its part in helping customers, particularly those who might be vulnerable, when they needed it most.
As Members may be aware, the Financial Conduct Authority has committed to publishing a discussion paper on the duty of care. Although that is welcome, I and many other Members have significant concerns about the timescale. The discussion paper will form part of the FCA’s handbook review, which will not take place until after the UK’s withdrawal from the EU is clear. What that timeframe means in reality is not yet clear. What we know is that a discussion paper would be only the start of a long process of consultation and legislation, so it could be many years before a duty of care came into effect. Meanwhile, during that time, nearly 1,000 people every day in the UK will receive the devastating news that they have cancer.
This is key. Often when we discuss such issues to do with financial regulation, the debates are technical and can feel removed from the general public. The duty of care is different. The public are starting to take a real interest in the issue, and those who see the terrible impact on people of conditions such as cancer are demanding that we take action. Take Miranda, a Macmillan nurse. In her role helping patients, she sees the financial impact of cancer at first hand. I want to share a couple of quotes from Miranda with the House:
“It’s enough to cope with the effects of the treatment and the psychological effects of the diagnosis, without having to worry about money as well”.
“To relieve the pressure of not having to pay your mortgage for six months or so…will be a tremendous help to people.”
Supported by Macmillan, Miranda has written an open letter in support of a duty of care. It has been signed by nearly 20,000 people—that is 20,000 people who want action. They do not want to wait years for change. What would the Minister say to those people? How would he justify any delay to them?
Of course, we all appreciate that Brexit will have significant implications for the financial services industry and that they will need careful thought, but that is not a valid reason for delaying the duty of care. Action is needed now, so that future changes are built on the foundation that financial services firms have a duty of care to their customers.
I urge the Minister to listen to what is being said today and to commit to working with the FCA to deliver faster action on the duty of care. He should listen to the cross-party concerns that have been set out here and in the other place. He should listen to the numerous organisations that have supported the call for a duty of care, to the Lords Select Committee on Financial Exclusion, which recommended its introduction, and to the 20,000 people who have called on the Government to take action. I thank Macmillan Cancer Support for its parliamentary briefing, which has contributed in a big way to my speech. Finally, will the Minister meet representatives of Macmillan Cancer Support to discuss the introduction of a duty of care?
It is a fair to say that the work of the Financial Inclusion Commission—I have met many of its members—needs to be recognised. In relation to credit unions, it is right that we pay tribute to the work that my hon. Friend has done. Does he agree that we should laud the fact that credit unions now have 1.29 million members, that their members and loans have doubled since 2006, and that their deposits and assets have trebled? With respect, he is following on from the great work of my hon. Friends the Members for Worcester (Mr Walker) and for South Ribble (Seema Kennedy), who were outstanding chairs of the all-party group before him.
It is a great pleasure to speak on behalf of the Government on the key issue of financial inclusion and the single financial guidance body, which we hope to bring before the House in the new year.
I thank my hon. Friend the Member for Horsham (Jeremy Quin) for calling the debate and for the contribution he made as a step-in member of the Financial Inclusion Commission, following in the footsteps of my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd). It is fair to say at the outset that I am deeply grateful to the commission’s authors, and I have met many of them, including Sir Sherard Cowper-Coles, who has been of great assistance to me in the five months I have been doing this job. He is part of the reason why we have a financial inclusion Minister at this stage.
It is an exciting time to be doing this job, in circumstances where we have over 8.5 million people automatically enrolled in a workplace pension and where we have the Financial Guidance and Claims Bill coming forward—it completed its passage through the House of Lords on 23 November, and it will come to this House in the new year. We are driving forward the points raised by my hon. Friend, whether on the pensions dashboard or the mid-life MOT.
I am particularly passionate about the need to address people’s financial inclusion and capability. If I may briefly digress and talk about my personal circumstances, I co-founded a local community bank in my constituency, in the north-east. Our community bank was launched in November 2015 by the Archbishop of York, John Sentamu. It was specifically tasked with trying to compete payday lenders out of business, as asked for by the Archbishop of Canterbury, Justin Welby. It has a small staff and an incredible team of local volunteers. It is fully accredited, with significant amounts of money deposited, and it makes low-cost loans to those who need them most.
I am no longer personally involved, because my ministerial role prevents me from doing so, but I do, as a Minister, want it to be my mission to champion such locally led positive solutions and to evangelise for savings and pensions. I pay tribute to all the staff who have helped so much in that institution.
The second institution I think it fair to thank is the Lords Committee that prepared a very detailed report in the 2016-17 Parliament on tackling financial exclusion. That was responded to by the Government recently. I pay tribute to the work the Committee has done addressing this issue. I also pay tribute to the Money Advice Service, the Pensions Advisory Service, Pension Wise and all their staff, because we would not be where we are today without their efforts. However, more particularly, those three organisations are particularly enthused by the opportunities that lie ahead with the single financial guidance body to address the issue we are all so keen to tackle: financial inclusion.
We are working very closely across the Government on this. It is sometimes argued—not, I accept, under this Government in any way whatsoever—that we exist in silos and that Departments do not necessarily speak to each other. I am particularly encouraged that the Economic Secretary to the Treasury and Ministers in other Departments are equally committed to addressing financial inclusion, and that we have a forum coming together to be co-chaired by the Treasury and the Department for Work and Pensions. That shows that we are jointly addressing this key issue.
We need to provide people with access to the tools and services that they need to plan their lives and to avoid the unnecessary costs that come with financial exclusion. It is also important, however, that people are confident that the financial system itself will work for them—that there is responsible capitalism, that they will be protected from practices that are a threat to their finances and that they can make financial decisions themselves that are appropriate throughout their lives. The single financial guidance body will be the key addresser of financial capability in the United Kingdom. We realise that not enough people know how to manage their money effectively. This body will ensure that those people, especially those who are struggling, are easily able to access free and impartial guidance to help them to make more effective decisions about their pensions and their money and to seek advice on their debt.
There has been widespread support for the measures contained in the Bill, which passed on a cross-party basis in the House of Lords after significant amendment and improvement. It is a credit to the Houses of Parliament that a Bill that started out as 19 clauses emerged from the House of Lords with 31 clauses, considerably amended but with great support from individual peers on all sides, as was borne out by Lord Stevenson noting that the Bill was strengthened
“not because of any particular line or argument in a political or wider sense but because…as a result, the lives of people right around this country would be improved.”—[Official Report, House of Lords, 21 November 2017; Vol. 787, c. 83.]
It is interesting that my hon. Friend raises that point, because it was specifically addressed by their lordships in some detail. He will be aware that the new financial guidance body will simplify the existing public financial guidance landscape, making it easier for all people to access information and guidance.
Let me briefly address the statutory objectives and functions, because I think that that will reassure my hon. Friend on the point about those in society who are vulnerable. The single financial guidance body will have a number of statutory objectives: to improve the ability of people to make informed financial decisions; to support the provision of information, money and pensions guidance and debt advice in areas where it is specifically lacking; to ensure that information, guidance and debt advice is clear, cost-effective and not duplicated elsewhere; to ensure that information, guidance and debt advice is available to those most in need, particularly people in vulnerable circumstances; and to work with devolved authorities.
I stress that the chief executives of the three organisations—Michelle Cracknell, Jamey Johnson and Charles Counsell—all agree that bringing these organisations together and harnessing the product of the whole will enable specific opportunities to address this point. That is particularly appropriate given that one of the functions of the body is not only the protection of individuals as consumers but a strategic approach to ensure that this guidance is there. I hope that my hon. Friend is reassured that that is something that we massively support.
My hon. Friend raised financial education. The strategy behind the creation of the guidance body is to develop evidence that clearly shows which projects are successful and which are not. The Government want the body to prove what helps people to make better financial decisions throughout their lives, and then to deploy that understanding actively in its efforts in the area and share the knowledge as part of best practice.
The Government want the body to maximise the positive impact of financial education for children and young people, so that they are better prepared. We definitely see the guidance body taking forward the issue that my hon. Friend raises, to ensure that children are better prepared for financial challenges at any age. That strategic function is underpinned by the premise that, although Government bodies, industries, charitable functions and the voluntary sector are already doing excellent work, if they work together the impact will be that much greater.
I want to take the opportunity to celebrate the LifeSavers project, which I am pleased to say exists in my constituency. The organisation provides at primary level exactly the sort of thing that my hon. Friend described. The community bank of which I was a part is the provider of six LifeSavers programmes, which are supported by the Church of England and Virgin Money. There is literally a bank in the school, educating children about the importance of finance, loans, deposits and long-term saving, which is the way ahead.
A large number of schools are part of that project, and we are evaluating its impact. It is Treasury-supported to a limited degree. I have visited participating schools, such as Hexham East First School in my constituency, and the difference that the programme makes is off the charts. My hon. Friend will be aware that my right hon. Friend the Chancellor has provided a great deal more money for maths education, more maths teachers and support across the curriculum to ensure that that key point is addressed on an ongoing basis.
Briefly, I will mention other areas of the Bill that address some of the points that my hon. Friend raised. I believe that we all accept that problem debt is an issue for too many people. The Conservative party manifesto set out the commitment that the Government would adopt a breathing space scheme, to allow someone in serious problem debt to apply for legal protection from further interest charges and enforcement action for a period of up to six weeks. The Financial Guidance and Claims Bill will enable the Government to introduce such a scheme.
The breathing space scheme builds on the local work of organisations such as those that my hon. Friend mentioned in Horsham. It sounds as though they are approaching the matter in an interesting way. The Bill will build on the existing work of the Financial Conduct Authority, which has instituted rules. Also relevant is the fact that in October, the Treasury published a call for evidence on breathing space, and evidence is still being taken on the best and most appropriate way forward. My hon. Friend the Economic Secretary to the Treasury, officials and I have met the people behind the operation of the scheme in Scotland, which has already introduced a debt respite scheme and breathing space scheme.
The key to inclusion is access to engagement with savings and pensions. Surely, the game-changer on that over the past five years is the development of auto-enrolment, as part of a cross-party approach down many years. It is one of the unseen success stories of successive Governments, and it has engaged individual consumers and members of the public to an astonishing degree and reversed generations of decline in savings and pensions. The statistics bear some contemplation. We are about to approach the point at which 9 million people are auto-enrolled in a workplace pension. Hundreds of thousands of individual employers have signed up to the scheme, and it has not only totally stopped the rot in relation to pensions but reversed a long-term decline.
We are conducting an auto-enrolment review to assess where we are with the programme, and we will be considering a number of key areas. Those include the existing coverage, how to achieve the right balance between enabling as many people as possible to save and ensuring that it makes economic sense for them to be included, how we can improve engagement and how to strengthen the evidence base around contributions to support future decisions on contribution rates. I will report the findings to Parliament before the end of the year. We hope that the review will provide a clear sense of direction as part of the ongoing conversation.
I want briefly to talk about the pensions dashboard, which is an important part of the conversation about how we can better use technology. Just as the private sector has reformed the travel industry, insurance and so many other business, such that we now go online to access information, so we believe that the same will bring pensions into the digital age. The dashboard is an opportunity to give people access to their pensions data in a clear and simple form by bringing together savings information in one place online. It is an opportunity to give more people a sense of ownership and control over their pensions. This is a complex process, but I look forward to a massive meeting of stakeholders on Monday, to which hon. Members are most definitely invited. The good news is that the Department for Work and Pensions is taking this forward. We are utterly committed to the ongoing feasibility study and believe that by placing consumers at the heart of our approach, the Government, working closely of course with industry, regulators and other interested parties—notably, consumer organisations —can achieve the goal of such accessibility.
I want to make a brief final point about the mid-life MOT. It has struck me in this job that although we address individual issues, in relation to our health and our ongoing status quo as human beings—my GP regularly, and rightly, contacts me with ways to improve my health—we do not address our finances in a similar way. The concept of the mid-life MOT, as pioneered by John Cridland in his outstanding state pension review, published earlier this year, could enable us to better encourage and support people in preparing for later life and retirement in a holistic way. I encourage all private sector companies, through their human resources departments, to conduct mid-life MOTs— organisations such as Aviva are leading the way—and I certainly hope that the public sector will address those points as well. We believe that it is unquestionably a promising idea worth detailed scrutiny. Individual workers or employers could be provided with holistic advice and guidance to prepare for the gradual transition to retirement—whether at 45, 47 or 50—and it is something that the Government should be progressing.
It is often asked what brings us into politics. Social justice and financial inclusion are among the things that brought me into politics. When talk about the achievements of this Government and the coalition since my hon. Friend and my colleagues at my side—my hon. Friends the Members for Calder Valley (Craig Whittaker) and for North Devon (Peter Heaton-Jones)—first entered the House of Commons, and when we talk about extending free childcare, improving schools results, introducing the national living wage, creating 3 million jobs, reducing income inequality and record high household incomes, we should remember that they are not just statistics, but steps towards tackling injustice and spreading opportunity. I believe passionately that the Bill will enable us to tackle financial inclusion. I welcome the work of those who have taken us this far on the journey, but I also welcome the opportunity to report to the House on the progress we have made and the opportunities that lie ahead to tackle this fundamental issue of social justice.
Question put and agreed to.
I will say exactly what I am proposing very shortly.
If the Government’s position is that Opposition day debate motions should have no binding effect on the actions of the Government, it fundamentally alters the relationship and balance of power between the Executive and Parliament. It would mean that apart from votes on legislation and matters of confidence, the Government could ignore the decisions and will of Parliament. This is very dangerous ground, and the situation needs to be seen in the context of the blatant power grab by the Executive that we witnessed on Second Reading of the European Union (Withdrawal) Bill last month.
The point is that we need an urgent response to this really important issue. We are calling for a clear set of proposals from the Government that will reflect the will of the House and pause universal credit roll-out while the issues that I raised—and many more that I did not have time to raise—are fixed.
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It is a system that is replacing a deeply flawed system and striving to face up head-on to endemic problems that we have had for decades and that were left in the “too difficult to deal with” tray—an old system, where complexity and bureaucracy had so often served to stifle the independence, limit the choice and constrain the outlook of its claimants.
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If I have time, I will make one specific point on that.
Other impacts have emerged as the Government cut the funding for DWP staff, which adds to waiting time and errors; many Members will have seen the article in The Independent from a DWP worker who deals with benefits. Then we saw the cuts to in-work support and the cuts to support for third and subsequent children. Those of us who live in high-rent areas, such as west London, where a small family flat costs about three quarters of an average worker’s take home pay, have seen no proper adjustment of the local housing allowance.
In the face of all this evidence, so clearly set out last week by so many MPs on both sides of this House, the Government party refused to vote, and three parliamentary days later the Government have still made no statement to the House in response to the many important and excellent points made in the debate calling for a pause. The Leader of the House committed the Government to respond to the debate and the vote. There is no reason why the Secretary of State or a Minister could not have come to this House before now, at least with an initial response, and today the Minister did not use the opportunity he had to respond to the vote last week. The Government’s actions—or, rather, lack of them—hold in contempt not only Parliament, but those already unable to feed themselves or their children, those who are facing eviction, those who have lost their jobs and, overall, those who have lost their dignity and hope for the future.
Let me give an example from my casework to show why the Government need to freeze or put a pause on the roll-out of UC. I have encountered two people, at different times, whose UC was stopped when employers paid them at the end of the outgoing month, because of the way the weekend or the bank holiday fell, and the DWP stopped their claim because it told them they had been paid double that month and so were not entitled to any UC. This went on for weeks and weeks, with them having no money to pay the rent and the childcare places being lost, and they were put at risk of losing their jobs. If a UC claim is terminated by the DWP, even because of a mistake by the DWP, it cannot be reopened, and the claimant is required to make a fresh claim and to use a new email address—all the journal is lost.
My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) has given the House several suggestions for changes and improvements that could be made to the UC system, including reducing the six-week wait, reinstating the limited capability for work element for disabled people, assessing self-employed people on their annual income, reinstating the level of work allowances and reducing the taper rates. Those are just some of the improvements that could be made and that the Minister could be considering. He could have made some initial comment on them just now, but he did not do so. The system needs to be properly resourced and to have adequate staffing and adequate IT. Local authorities and other landlords need to have access to claim data. By saying that they want the system to work, the Government are, in effect, admitting there is a problem. They need to do more than just want the system to work; we need to know when they will make it work.
Mr Speaker, after last week’s debate, you said:
“This place, and what we do here, matters very much.”—[Official Report, 18 October 2017; Vol. 629, c. 957.]
I agree with you, and so do my constituents.
Conservative Members have talked a lot about improving work incentives. I shall not go over the history, but I have constituents who say things such as:
“My own personal position is that of a single parent carer to my disabled child. I can’t work as he has very high and complex needs… Quite frankly the rollout of universal credit is terrifying”—
Last week, I shared with the House my own experience of benefit delay as a single parent when I was working as a teacher. We all sat and listened as Members from across the House voiced their concerns—and their constituents’ concerns—about the impact of universal credit. We also heard some horror stories—only they were not stories; they were accounts of ordinary working people living through the so-called reforms that this Government have insisted on pushing through. The concerns raised on the Opposition Benches were echoed by Gingerbread, Citizens Advice, Crisis and—indeed—some Members on the Government Benches.
Surely the Government do not plan to ignore the decision made by this House and to carry on regardless? The six-week wait is forcing people into further debt. My constituency of Crewe has been identified as one of the most indebted places in the country, with almost 4,000 children living in poverty. My constituents literally cannot afford to be subjected to this punitive programme.
Will the Government admit that the six-week wait is nothing more than a penny-pinching exercise? How dare they patronise us with their excuses? Do they really expect me to explain to my constituents that the Government’s six-week wait is there to teach them how to manage their finances better? We keep hearing the stock defence that universal credit is getting more people into work. What type of work is that—secure work, work that pays a real living wage? We all know what lies behind those unemployment figures—poverty pay and precarious work. The truth is simply that this Government’s policies are hurting ordinary working families, hurting the poorest and hurting the most vulnerable in our society.
We were told that this policy would “make work pay”, but the Institute for Fiscal Studies says that a further 3 million working families will be made on average £2,500 a year worse off. Food bank referrals have increased by more than double the national average in areas where universal credit has been fully rolled out.
The Government have finally listened to the Labour party and stopped ripping off constituents with their premium charge helpline. They now need to listen to the calls of charities and councils and immediately pause and fix the roll-out of universal credit, before more people are pushed into debt, hunger and homelessness. A pause would stop the rapid increase in the number being brought under their programme. I ask the Secretary of State to outline his response to the many concerns that have been brought to his attention again today. This is the Government’s last chance to show that they do have some heart, that they can see sense and that they respect the decisions made by this House; otherwise, they risk consigning themselves to the dustbin of history as a Government who lack compassion, competence and credibility in equal measure.
Thank you, Madam Deputy Speaker, for calling me to speak in today’s important debate.
I know that many Members on both sides of the House share my concerns, but they are also shared by many outside this House. They are shared by organisations at the forefront of supporting people through difficult periods and supporting the most vulnerable in our society, such as Community Housing Cymru, Citizens Advice, Shelter, the Child Poverty Action Group and the Trussell Trust—to name but a few.
Those organisations know at first hand how a system is meant to work and when something is not working, because they are generally the ones picking up the pieces when people’s lives are turned upside down by debt and anxiety, caused at this time by problems with the roll-out of universal credit.
We have heard and will continue to hear throughout the debate evidence that the roll-out causes significant hardship and undue stress. The Government must listen to the genuine concerns from across the country to prevent further hardship. Those concerns do not constitute negativity and scaremongering, as some Conservative Members suggest, but reflect reality.
Clearly, the first thing that needs reconsideration is the six-week waiting period. In most circumstances, people do not have savings or money set aside to cover day-to-day living expenses during that time. Advance payments are not a solution for claimants who cannot wait a minimum of six weeks for their first payment, as they cover only part of the claim and must be repaid through a deduction from future payments. In most circumstances, an advance payment will not cover the costs of a tenant’s rent, leading to arrears, claimants needing to use food banks, and to increasing debt and poverty.
I understand from some housing providers that they often receive conflicting messages from DWP staff while those staff are gaining the full knowledge and skills to administer the new system. A pause and period of reflection would allow the Government to address issues with the helpline, and offer training and support to DWP staff to ensure consistency of information for both tenant and landlord.
With the proposed roll-out being accelerated significantly from this month, it stands to reason that the problems identified so far will be magnified, leading to thousands of families facing an uncertain time in the run-up to Christmas and well into the new year. If the system is creaking now, rolling out at the proposed pace will make matters a lot worse.
In my view and that of many colleagues in this place and outside, the Government need urgently to reconsider the roll-out to address the very real concerns, undue hardship and anxiety that the policy is causing and look at how it can be improved.
I know I have not been here for long, but I am having difficulty believing my ears when I hear some of the stories from my hon. Friends who have already had this system rolled out in their constituencies. I am astounded by what I hear from some on the Government Benches and appalled when they say it is those of us on the Opposition Benches who are scaremongering. It leaves me to genuinely wonder what colour the sky is in their world. But I stand here thankful to represent my constituents, and to stand up for a better Gower and a better Wales for our children to grow up in.
I took a bit of a bashing on Twitter this week, because I said the Government had shown a lack of empathy when it came to universal credit. As a former teacher, I love to learn and I am happy to be proved wrong, so I call on the Government to show empathy now. This is a chance for the Government to show that they have listened to the serious concerns that many Members have raised today. I hope they will show empathy, so that my constituents, who will have universal credit rolled out just before Christmas, will not have this hanging over their heads during the holidays. Who will my constituents turn to when they need to apply for their “loan” and the offices that provide support are closed? How will the DWP staff cope in that short period of time with such requests in addition to their normal duties?
I already have working people coming to my constituency office helpless and looking for a referral to the food bank to feed their children. What will it be like at Christmas when council figures estimate that people in work in Swansea will be £42 a week worse off? All I ask is that the Government show some empathy to the parents who need to juggle childcare and work as they try to provide the best they can for their children and families. Show empathy and give a more compassionate start date to the roll-out of universal credit in Gower and Swansea.
All the evidence shows that the roll-out of universal credit will see in-work poverty soar. There is a wealth of evidence from across the country that where universal credit has been introduced evictions are up, the use of food banks is up and the number of people in in-work poverty is up. Significant changes are needed. I wholeheartedly agree with the hon. Member for Paisley and Renfrewshire South (Mhairi Black). She is right when she says that those of us on the Opposition Benches—see how many of us are here—are not making it up. The Government need to consider a pause.
It is a real pleasure to follow the widely respected and thoughtful comments of the right hon. Member for Birkenhead (Frank Field). Sometimes they are difficult for the Government and sometimes they are difficult for the Opposition, but we should always take heed of his comments and listen to them very carefully.
This debate nearly passed me by until I saw a quote in the report stating:
“An economy that is skewed towards baby boomers and against millennials”.
That panicked me. We all have our own calling into politics. I went to a school that was bottom of the league tables in Kidderminster and my father died at an early age. Many of my friends did not fulfil their potential. I was always driven by the thought that, given the right opportunity, everybody can be successful if equipped with the right skills, sometimes the right luck, the right support and the right direction. All too many people—very, very good friends of mine—did not take that path and have missed out. That is bad for them, bad for the economy and bad for society.
I looked at that quote and I worried, because to me it was one versus the other, rather than the core principle that we have a duty to do our very best by everybody. I know a lot of people will focus their comments on the triple lock—whether it is right, whether we are doing too much for pensioners and whether we should be doing it in a different way. I would just gently say, because I wish to focus my comments on the younger generation, that we all welcomed the triple lock. There had been a long time when perhaps we had underserved those who had worked hard all their lives. I just urge caution. Once people get to pension age, they have limited opportunities through which to change their circumstances. They have either fulfilled their potential or there is not really much more opportunity to do so. They have reached the finish line that the right hon. Member for Birkenhead talked about. We have to respect the fact that their incomes are predominantly fixed, and we have to do our best by them.
I am very grateful for the fact that we have a fantastic Pensions Minister who will be responding to the debate and who will no doubt comment in detail on that point.
The broader point, as I turn to the opportunities for younger people, is that we all collectively—the Government and the Opposition—have a responsibility to recognise that we have a habit of spending more money than we get in as tax revenue. Since the second world war, I think there have been only six years where the Government of the day have spent less money than they have collected. What that really means in plain English is that we, as the generations from most of those years, wish to have more than we can afford and we would like our children, or maybe our children’s children, to pay for it. This applies to all Governments, except in those six years where, for whatever reason, the Government of the day were able to collect in more tax revenue than they spent. We have a moral duty and responsibility to future generations not always to take that easy decision.
I was doing a radio interview yesterday on a relatively contentious issue involving possible additional Government spending, and another MP said, “Well, if I was the Minister, I’d have taken the hit.” The key point was that it was not they who would have taken the hit; it was everybody. Given that we already spend more money than we collect, what they were saying was, “I’d pass that one on to the next generation as well.” We all know that. We would all like to balance the books immediately, but we also all have a long list of personal priorities we would like to spend money on—our inboxes are full of helpful requests from residents for where we could spend more money. Many of those are very important—a balance always needs to be struck—but I gently remind the House not to lose sight of the fact that if we wish to give the best opportunities to future generations, we must not saddle them with too much of our own overspending.
I am inherently a very positive person—I believe that if we equip people and give them the opportunity, they will seize it with both hands and make a huge success of it—so I am greatly encouraged that our Government have delivered 1.8 million more good or outstanding school places. As someone who went to a school at the bottom of the league tables, I understand the importance of equipping people with the right skills. In my constituency and across Swindon, we have had a difficult Ofsted report recently. We have fantastic teachers, headteachers and governors all trying their best in Swindon and we have secured extra funding for our schools, but we are not quite there yet.
We all—the Government, MPs, the council, the schools collectively, the parents—have to look at what more can be done. I am encouraged that the schools Minister recently visited two of my local schools, Nova and Swindon Academy, both of which are transforming the opportunities for their children, having come from what not so long ago were very poor ratings. Frankly, they were failing the children who were relying on them to equip them for the future, but both have transformed their ratings through strong leadership, and I am delighted that yesterday Ofsted confirmed that Nova had moved to “good” in all categories. I pay tribute to Mr Barton, the headteacher, and all his staff who have worked incredibly hard to achieve that. Schools are the fundamental building block for equipping young people in life.
I am also a huge fan of the National Citizen Service, a new initiative giving young adults real, tangible life skills, and every summer, without fail, I visit every stage of the three to four-week programme. It takes a random collection of young people—the activities cost about £1,500—and sends them away for a week to learn teambuilding skills. They then come back, form teams and choose a charity. They learn about that charity, organise entrepreneurial and fundraising activities, volunteer for the charity to see it at first hand, learn presentation skills, haggling, engaging and so on, and at the end, they graduate as NCS students. There is an incredible transformation in all those young adults, who arrive well educated by their schools but perhaps not quite ready for the workplace. I ran my own business for 10 years and employed a lot of young people and I am encouraged to see the huge difference in those young adults. They take the time in their summer holiday, when it is tempting to do other less-constructive things, to go and engage. In doing so, they give themselves the best opportunity when entering the workplace.
University numbers continue to increase, but the Government have rightly put a huge emphasis on apprenticeships. For generations, Governments and Opposition parties got into an arms race on students going to university. Every general election, we would hear, “We sent 25%.”, “Well, we’d send 30%.”, “We’d do a third.”, “We’d do 45%.”, “We’ll break 50%.”. Everybody has a talent. David Beckham is not renowned for being academically gifted, but he has a gift that has earned him more money in a week than the majority of people in society will ever earn, and that was because somebody recognised his skill and allowed him to develop it.
We all have a talent. Every time I failed to make it on to a sports team, I wondered whether I did—perhaps that is why I am here—but everyone has a talent, and apprenticeships rightly recognise that. Workplace learning provides people with real, tangible skills and a fantastic opportunity to secure a long-term career with good career prospects. That is also vital for our growing economy, particularly where we have skills gaps.
In the last Parliament, we had a commitment to 2 million apprentices, which we have met, and in this Parliament we have rightly identified an even more ambitious target. It will be tough to get there, but it is right to have such challenging targets. I have spent, as I am sure have all hon. Members, a lot of time meeting the young apprentices who are doing things that I have absolutely no idea about—advanced engineering, all sorts of complex things with computers. They are on the first rung on the ladder towards their brilliant careers. They will all go on to huge success.
Across the economy, this Government have now delivered record employment—2.7 million more people are in work than when we came to office in 2010. That is not just in London or the south-east, as has sometimes been seen in previous strong economic performances; it is in every single region of the country. In my town of Swindon, 8,400 more people are in work, which is greater than the number who currently go on a weekly basis to see Swindon Town bravely fighting the relegation battle. Thankfully, with the victory at the weekend, we have got a bit closer to achieving the objective.
There are now 865,000 fewer workless households, and youth unemployment is at its lowest since 2005. In Swindon—I know that people are keen to know how well we are doing—youth unemployment is down by 69.2% since 2010, which is a fantastic achievement. The Government have rightly introduced the national living wage so that we are looking at a wage of about £9-plus by 2020. That will help 6 million of the lowest earners to have a pay rise and to share in the proceeds of the strong economic growth that we have delivered. The increases in the personal tax threshold have taken the 3.2 million lowest earners out of paying any income tax at all, and we are continuing to raise that threshold to £12,500, after which it will be index linked, making sure that the lowest earners will never return to the point of having to pay income tax again.
I beg to move,
That this House notes with concern the £3.4 billion reductions to the work allowance element of universal credit and the £1.4 billion reductions to employment and support allowance; calls on the Government to reverse those reductions; and further calls on the Government to reintroduce detailed distributional analysis for the Autumn Statement and all further Financial Statements, as was done between 2010 and 2015.
On a solemn note, I wish to send my condolences to the family and friends of Debbie Jolly. Some Members may have known Debbie, who was a disability campaigner. Over the years, she provided briefings for many Members of the House of Commons and, through Disabled People Against Cuts, was involved in many of the various lobbies of Parliament. She passed away last week, and I would like to send our condolences to her family and all her friends. We all hoped she would survive long enough at least to see this debate. I pay tribute to her for the work she did.
I want to explain the genesis of the motion that I and my right hon. and hon. Friends have tabled for today’s debate. As we all know, the autumn statement is a week today. Traditionally, we would have held an Opposition day debate and used it to have a wide-ranging debate, second-guessing and commenting on what we predicted would be contained in the autumn statement.
This year, we want to try something different. We want to break radically with that tradition, because next week could be the last chance to head off what is shaping up to be quite a harmful disaster for many low earners and many vulnerable people in our society. For our debates today, we have taken two significant issues that are contained in the Budget plans announced earlier this year by the Chancellor’s predecessor, and which the new Chancellor has the ability and opportunity to intervene upon and, we hope, reverse. The first is the plan to cut the work allowance element of universal credit and employment and support allowance, and for the later debate we have chosen the issue of funding social care.
We believe that the Chancellor, by withdrawing the proposed cuts to ESA and universal credit, would dramatically beneficially impact upon the lives of many, many of our fellow citizens, who are, yes, low earners, but many of whom, through their disability, are also often the poorest and most vulnerable in our society. We want to see today and, yes, over the next week, whether we can assemble across the House a coalition of pressure that can decisively influence the Chancellor to think again.
I welcome the Back-Bench debate that has been secured for tomorrow, which I believe will contribute to forming that coalition; I certainly believe and hope that we can succeed in doing so. So the appeal to hon. Members today and in the coming week is to do all we can to prevail upon the Chancellor to halt the policy of cuts to universal credit and ESA contained in the Budget introduced by the former Chancellor, which are planned to come into effect on 1 April.
Before I come to the grounds for making this appeal to the Chancellor, it is important to understand the origins of the proposals, and this goes to the heart of the autumn statement process. I believe their origins lie in the mistake by the last Chancellor of imposing a fiscal framework on his colleagues that was simply impractical, given the economic circumstances that we were facing, and certainly what we are about to face. If the fiscal framework is wrongly set and, importantly, if it is so inflexible that it cannot reflect the realities and challenges of the economy, decisions on both tax and spending equally fail to reflect the economic realities and meet the new economic priorities. I believe that in this instance, the fiscal framework imposed by the former Chancellor was so inflexible, and unworkable in the end, that it totally failed to meet the economic targets he set for it. It is also vital to understand that the former Chancellor’s fiscal framework imposed on his colleagues’ Departments unrealistic constraints that are undermining their ability to achieve their own policy goals.
The hon. Gentleman clearly has not been listening. We introduced a fiscal credibility target, which would have built in the flexibility that we need—and actually, which his colleagues would have benefited from as they sought to deliver the goals set out in the manifesto upon which they were elected. That is the critical problem—that this fiscal target has become unworkable. Next week, most probably, we will see that not only will it be reset, but large elements of it will be scrapped; and some of those political disputes within the Government will be seen to have been completely unnecessary if only the Chancellor, at that stage, had listened not just to us, but to some of his own colleagues.
On the Government’s own economic metrics, the fiscal framework has failed. I remind the hon. Member for Horsham (Jeremy Quin) that the former Chancellor’s target was to eliminate the deficit by 2015. The deficit remained at over £45 billion in the first six months of this financial year. I remind the House that his target was to reduce the debt. The debt now stands at £1.7 trillion and has increased over the past six years, according to the latest estimate, by £740 billion. I believe that the biggest failure was to ignore the needs of the real economy and use the fiscal framework to constrain investment. The failure to invest on the scale needed to modernise our economy resulted in stagnating productivity.
In the face of all the evidence that the fiscal framework was not working and not achieving its target, the decision to set a target for the framework not just to eliminate the deficit, but to produce a multibillion-pound surplus by 2019-20 demonstrated to many of us how far the former Chancellor’s politics was overriding sound economics. The result of his setting targets even more removed from reality was that he imposed on his own colleagues the task of scrambling round to find a scale of cuts that, in many instances, undermined what chance they had to implement the policies on which they were elected and their long-standing ambitions, some of which could have secured cross-party support.
That was no more evident than at the Department for Work and Pensions. For the Treasury to demand cuts to universal credit that would take, on average, £2,100 out of the incomes of people who were doing all that was asked of them—working all they could to come off benefits, bringing up their families, contributing to society—flew in the face of all that the universal credit system was meant to be about. The same can be said of the cuts of nearly £30 a week to employment and support allowance. That is an extremely significant cut to the incomes of disabled people who are also doing all that has been asked of them—seeking work to lift them off benefits, and overcoming their disabilities and conditions.
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I fundamentally agree. There is a £36 billion tax gap, so let us fix that hole. I listened to the Minister talk earlier about the challenges the Government face in fixing the deficit. What they fail to recognise is the interaction between fiscal and monetary policy. It is the richest who have benefited most from quantitative easing. We should have had a fiscal stimulus package. That would have driven investment and productivity into the economy, and got more people back into work. That is what we should be doing.
It most certainly is not. The reason for the rise in inflation—to something between 2% and 3% next year, according to commentators—is, quite simply, that the pound has crashed, and the reason the pound has crashed is that investors do not have confidence in the UK economy, and who caused that? It is a direct consequence of Brexit, through the referendum, which was the misjudgment of the previous Prime Minister.
I will, as the right hon. Gentleman would expect as an experienced denizen of this Dispatch Box on this subject, come to that in the course of my speech. This is, as I have said, a complex matter and it is important to get it right.
Let me start by setting out the principles on which I will operate in this area.
Absolutely, I will. I am coming up, in a minute, to the six-day anniversary of my occupation of this post, so I apologise if I have not taken all the representations in person yet, but my Ministers and I are certainly trying very hard to do so.
As everyone on both sides of the House knows, the supported housing sector provides important support to a diverse range of groups and individuals across the country. It supports those with learning difficulties, allowing them to live as independently as possible; it provides a safe refuge for those escaping domestic violence; it helps ex-offenders make a successful transition back into mainstream society; and it supports those who have experienced homelessness. The sector helps to transform lives and it allows people to live as independently as possible, to move into work where possible, which is hugely important, and to be safe, healthy and happy. It is a very important sector.
As constituency Members, we all have examples of that kind of support being provided. I have visited the Porchlight project in my constituency, which helps vulnerable and isolated people get support with housing, mental health issues, education and employment. Vital work is done by this sector. From my previous experience in government, I have seen the value of the sector in the criminal justice system. A stable and supportive environment can be the key to reducing reoffending. For example, Stonham BASS provides accommodation for people who have been bailed by the courts or released on home detention curfew after they have served a prison sentence. The service reduces unnecessary imprisonment and the negative effects that it has on family life, employment and housing, and so helps to deter people from reoffending.
The hon. Gentleman raises a good point. We are committed to transparency and openness, and, when opportunity allows, to putting them into place in legislation.
We are working very closely with the Pensions Regulator to ensure the whole programme of auto-enrolment is easily understood, in particular for self-employed people and those who have one or two employees, so that the rules are in very clear easy-to-use language on the website and in offline literature and any other offline facilities.
No, I do not think that that is fair. There is now a large and growing group of people who are significantly worse off than they would have been because they have the misfortune of being in an area where universal credit is paid instead of tax credits. My hon. Friend is absolutely right to draw attention to that.
When the universal credit project started in 2011, we were told that it would be completed in six years. Today, five years later, we are being told that it will be completed in another six years, by 2022. Five years into this initiative, its expected completion has been delayed by five years. We are no nearer the end now than we were told we were five years ago.
Of course that is right. There should have been a sensible timetable and plan from the start. It was pointed out to Ministers that the original plan was unrealistic, but unfortunately they took no notice of that.
It is not just the timetable that has changed, however, but the substance. What is being implemented is now significantly different from what it was originally going to be. A report published last week by the Resolution Foundation has made that very clear; I will refer to that report a number of times in my speech, but at this point I will quote one observation from its executive summary, which says that
“the latest series of cuts—announced at last year’s Summer Budget—risk leaving UC as little more than a vehicle for rationalising benefit administration and cutting costs to the Exchequer.”
That is at the heart of this debate. Universal credit is now set to be a pale shadow of what Ministers initially announced. The losers, both from the cuts made to the original proposals and from flaws in the original design that have never satisfactorily been addressed, will above all be the nation’s children.
The Resolution Foundation has explained the impact of the £3 billion cut announced last summer:
“As initially designed, UC gave broad parity with the current tax credit system…Now, UC will…be less generous than the tax credit system for working families.”
That is what gives rise to the anomaly and unfairness to which my hon. Friend the Member for Neath (Christina Rees) drew our attention.
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I am glad the hon. Gentleman mentions the IFS, because it also said that
“universal credit should make the system easier to understand, ease transitions into and out of work, and largely get rid of the most extreme disincentives to work or to earn more created by the current system.”
The IFS seems to quite like the introduction of universal credit, which has to be looked at in the round. The Government are introducing a whole package of measures. I listed some of them. The growing economy and rising employment also help.
The other issue that is not taken into account when we consider universal credit is what is sometimes referred to as the dynamic impact—a horrible bit of jargon—of universal credit. This seeks to take into account changes in individual behaviours in response to the introduction of universal credit. It is quite difficult to analyse but it means improved opportunities for people to move from welfare into work, which changes people’s behaviours. This is a vital point. Even though it is in its early stages of introduction, as pointed out already, there is significant evidence that universal credit is doing well and succeeding at ensuring that more people move off welfare and into work. The latest figures show that for every 100 people who found work under the old jobseeker’s allowance system, about 113 universal credit claimants move into a job. What matters, however, is not just the fact of moving into a job but the quality of the job and the pay, and people are actively looking to increase their hours and their earnings as well.
I absolutely agree with my hon. Friend. That is important, and the latest figures show that 86% of claimants on universal credit are actively looking to increase their hours, which compares to 38% under JSA, which is a significant difference. People are actively looking to increase their earnings as well, which goes to the heart of his point. Some 77% of those on universal credit are actively looking to increase their earnings, compared to 51% on JSA. That is a really important part of the universal credit package.
Thank you for calling me to speak in this important debate, Madam Deputy Speaker. I shall start by focusing on one or two comments that Members made earlier and then return to a central issue—getting those with disabilities back into work.
The right hon. Member for Birkenhead (Frank Field) said that 3 million strivers will be hammered. I am a great fan of his—he is the Chairman of the Select Committee of which I am a member, and I am sorry he is not in the Chamber to hear this—but his gloom tonight was focused on two things. The first is the big problem of unity and what approach to take to welfare and work within his own party. The second is an underlying belief that the only way to help the poor is ultimately to increase benefits from taxpayers, and that the only way out of poverty is to grow a tax credits bill that is already, at £30 billion a year, far greater than in the similar populations of France or Germany, and is, in the words of the former Chancellor, previously the right hon. Member for Edinburgh South West,
“subsidising lower wages in a way that was never intended”
when it was first introduced by the Government of the right hon. Member for Birkenhead.
The reason the right hon. Gentleman and his party are discombobulated on the issue is that they rightly feared a reduction in benefits before an increase in wages and did not expect that my party, the party of compassionate conservatism, would implement precisely that: a national living wage considerably above that mooted by their former leader, plus an expansion of the tax-free allowance that will take the amount one can earn without paying income tax to almost double by 2020 the £6,500 allowance of 2010. They know that higher wages, lower tax and less welfare is the right way forward, because there was no social justice in spending over £170 billion more than we received in tax revenues, leaving the interest on Labour’s debts alone—the interest alone—costing us more than the entire education budget. There is no social justice in spending more on benefits—on the interest on all that debt—than on helping our children with education and giving them the chance to attain and to go on to good jobs.
Some of Labour’s leadership candidates have realised that point and seen that there are no more sweeties in the sweet bag and no credible alternative to this overall philosophy of higher wages, lower tax and less welfare— unless one believes that living within one’s means is always for someone else and not for us, and one wishes to follow an anti-austerity programme that has led a country like Greece to the brink of disaster. That is a political option, but it is not one that the city of Gloucester would ever want this country to follow.
I turn briefly to the second part of my speech. The Chancellor promised in his Budget speech that we would always support the elderly, the vulnerable and the disabled.
My hon. Friend is absolutely right to point out that the current welfare bill is unsustainable, but he is also right—I have heard him say this in Select Committee meetings—to say it is vital that we support the elderly, the vulnerable and the disabled. It is true that the Work programme has been far more successful for those on JSA than for those on ESA. The question therefore is: how do we help those people with disabilities who are currently not getting a job and not benefiting from the Work programme in the same way as those on JSA?
Some 61% of those in the ESA work-related action group say that they want to work, and the evidence is that they do. I have heard from charities and from people with disabilities in my constituency how passionately they want to have the same working opportunities as the rest of us, so what can we do to help them? The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for North Swindon (Justin Tomlinson), in his role as the Minister for disabled people, has the ambitious task of halving the number of people with disabilities who are out of work. He will need some innovative thinking to help him, so let me make a couple of suggestions.
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Welfare reform is needed, but if it is badly thought through it will hurt people, including low-paid workers. The Bill cannot be supported without major changes, so I say to the Government, think again. If the benefits and social security regime is not subject to sensible and proportionate reform, popular support for it across society will fracture, and the case for giving assistance to those in need will be undermined. That in turn will give those who are politically or ideologically opposed to providing assistance to the vulnerable, the temporarily jobless, the low-paid in expensive private sector housing, those with life-changing disabilities, carers and others the opportunity to destroy a social contract that has been steadily constructed and refined over decades.
The support regime must of course be refreshed and renewed for each new generation, and to fit prevailing social and economic conditions. Those who argue against any change are doing real harm to the durability of that social contract. But those changes must be carefully considered and evidenced, proportionate and progressive.
The Government are opening themselves up to accusations that their intentions may not be entirely pure and may not be focused on good and appropriate reforms. We can look at the rush, and at the dismissal of critical analysis of the consequences of tax and benefit changes. There is a seemingly cavalier and careless attitude to negative impacts on low-paid working families, carers, some people with disabilities, and absolute and relative child poverty. All those things suggest that the honourable and high ambitions of some Government Members—to reform the regime to help people out of poverty—risk being bound together with a lower and less honourable ideological fixation with urging the poor to sort themselves out.
I have long been in favour of sensible, progressive and radical welfare reform. Most people, including Labour party members and supporters, want those reforms focused on conditionality, which is not limited only to funds, to help people back to work. They want support for those who genuinely cannot work, and help for carers that gives them dignity, not a begging bowl. They also want a continuing commitment and specific policies to target and remove poverty. Those are all marks of a decent society and decent government. Yet I cannot and will not vote for the Bill today, despite the need for reform, because it risks making life more miserable, desperate and unforgiving for some of the most financially exposed and vulnerable people in our society. The full-throated proponents of the Bill do not seem to see that, or perhaps they do not want to see it.
The core mission of government surely has to be to help make the lives of people better, or, at the very least not to make them worse. That is why I urge all Government Members, including well-meaning supporters of the Bill, to think long and hard before swallowing it whole. The digestion of the contents by their constituents back home will be long and bitter, compared with the short-lived, sugary-sweet taste of a brief political moment in Westminster. I say to them: do not punish low-paid workers, when the IFS shows clearly that the combined impact of the tax and benefit reforms will do exactly that; do not further impoverish children, when groups such as 4Children, which are not against reform, call for changes to be made sensitively and intelligently; do not shoot the messenger by dismissing authoritative organisations and individuals who point out the flaws in the Government’s proposals.
The Bill as it stands will not have my support today, and unless it is changed to take into account the valid concerns that have been raised, it will not have my support in future. In the light of all the dangers contained in it, I call on the Government to think again.
I am sure that the hon. Lady is well aware that Scotland’s childcare offer is significantly better than that enjoyed by people in other parts of the UK, and that our housing situation is not exacerbated by real rent imbalances similar to those experienced in London and the south-east of England in particular. I will pick up on that later.
The hon. Lady will also be aware that the Scottish block grant is calculated on the basis of the contents of the Red Book. The money currently allocated to Scotland is determined by this Chamber, so this Budget is relevant to everybody throughout the UK. It would be very wrong to ignore the fact that the purse strings are still controlled here, and that is one of the reasons why I argue for those powers to be sent up the road to Scotland, where we can use them more wisely.
I want to return to the issue of child poverty and the paper exercises conducted to measure it. Whatever we do to massage the figures, I do not think any of us can avoid the evidence of our own eyes in our constituencies. We are seeing growth in child poverty on the ground. We see it in the rise of food banks, which have already been alluded to, and in the larger number of people coming through MPs’ doors with income-related problems. That is also being experienced by advice bureaux. We also see it in the evidence of organisations that work directly with vulnerable families and those on low incomes.
In my constituency, one in five children is growing up in poverty. That might come as a surprise, because we enjoy some of the lowest unemployment in the whole country. A very small percentage of people are not in work, but many thousands of people are in low-paid work, and it is those working poor who are going to be most affected by what was announced yesterday.
More families than ever are running to stand still, and under this Government more people are being left behind. The UK has a deeply polarised labour market, and the ability of people in low-paid work to get ahead is severely curtailed.
I will not give way at the moment.
Amid all the rhetoric and the hyperbole of Budget day, it would have been very easy to form the impression from the media lines being trotted out yesterday that tax credits are predominantly a benefit paid to unemployed people, when in fact the opposite is the case. In Scotland, the overwhelming majority of tax credits are paid to working people. In fact, half of all families benefit from tax credits, and 95% of tax credits in Scotland are paid to families with children. We should make no mistake about where the cuts are being targeted.
It is inevitable that today we will consider the short-term consequences, because those cuts will put acute pressure on families, but we should be under no illusion: growing up in poverty has serious long-term consequences for children, too. It is associated with poorer educational attainment, poorer job prospects, poorer health throughout life and lower life expectancy. That is why asking families to bear the brunt of the cuts is so short-sighted. It has not only an enormous social cost, but an enormous economic cost: it holds back our economic progress and productivity, which are what we should really be focusing on and trying to improve.
The Government have tried to argue, today and yesterday, that the cuts will be offset by increases to the minimum wage and changes to the personal allowance, but that claim simply does not stand up to scrutiny. I think we all welcome the announcement of a long-overdue increase in the minimum wage to £7.20 an hour from next year and, indeed, the changes to national insurance, but let us not kid ourselves that rebranding the minimum wage as a living wage will actually make it a living wage.
There is already a living wage: it is calculated by the Living Wage Foundation and is already used by employers in the public, private and third sectors, including, I am very pleased to say, the Scottish Government. The living wage is based on the actual cost of living and it is already £7.85 an hour outside London and is due to go up again in November. We need to be absolutely clear that £7.20 is not a living wage and it will not offset the cuts in tax credits.
The critical point about the living wage is that it has been calculated on the basis of low-paid workers claiming their full entitlement to tax credits at the present rate, so any cut in tax credits means that the living wage will have to go up even further in order for it to provide enough for people to live on. If the Government take on board only one of the points I make today, I want it to be that one.
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I am most grateful to the hon. Lady. I will indeed look into those figures. I hold surgeries every Friday, so I will see constituents about that. What I would say to her is that unemployment in Weaver Vale has dropped by 70% since 2010, and that is 80% full-time, good quality jobs.
I am not saying it is easy, but these difficult decisions have to be made. When Gordon Brown introduced working tax credits, he said the figure would be £2 billion. It is now £30 billion. The Labour party has to decide—I asked this question yesterday and did not get a reply—whether £30 billion is too much, too little or about right. We have to make these difficult decisions, but the hon. Lady makes an important point. I am not saying for a moment that it will be easy, but we are the party of aspiration. We are the party that always makes work pay, which is something that did not happen under 13 years of Labour.
My hon. Friend makes a powerful point. Working-age benefits are something we have to tackle so that we can eradicate the deficit and start paying down the national debt. That is what I believe in. I believe that the Government are right: a higher-wage, lower-tax, lower-welfare economy. Britain is open for business. That is the future for our country.
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In a global economy, where companies can invest in any country they choose and base their operations anywhere around the globe, it is absolutely essential that we get companies to invest in our country. We are ensuring that that happens by setting a competitive rate of corporation tax.
I am very grateful to my hon. Friend for his intervention. Investment in our country is growing, which is why we have an increase in revenues.
For all three reasons, this is a Conservative Budget that is a Budget for all. It is founded on principles that should command cross-party support.
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The hon. Gentleman and I both come from a trade union background. I feel for public servants such as the firefighters, the police officers, the nurses. All those who do excellent work for the communities we serve, who have already been squeezed for five years, now face a 1% increase for the next four years. Effectively, that means a substantial cut in the living standards of millions of public servants.
The Chancellor says that the £7.20 rate will start next April, but the real living wage—I repeat, the real living wage—is already £7.85, or £9.15 in London; that is not based on cutting tax credits. As for the Chancellor being the workers’ friend, I did not come down with the last rainfall, and neither did the country. It is not a living wage if people cannot live on it. As the reality dawns and millions feel the pain of what the Chancellor has done, the last 24 hours of triumphalism on the part of the Conservative party will give way to the grim reality as Government Members go back to their constituencies and explain why they are inflicting cuts in living standards on the hundreds or potentially thousands of families they represent. The IFS’s verdict today is absolutely damning: for 13 million families, the living wage will not compensate for the tax credit cuts, and the poorest will be hit much harder.
When it comes to the Tories as the party of working people, let us not forget that this was certainly not a Budget for young working people. The crucial test of any Government is how they treat the next generation. Young people need the basics in life to get on—a decent job or education, and a roof over their heads. The Budget fails on all those points. It locks young people out of the living wage, makes higher education increasingly a luxury and cuts housing benefit for thousands who would otherwise end up homeless.
At this defining moment for our country, we must ask ourselves about what kind of country, economy and society we want. For me, it is an economy with a real living wage, not a phoney one. Crucially, as I have argued throughout my trade union life, it is the high-pay, high-quality, high-productivity culture of the kind that can be seen in the Jaguar factory in my constituency. We need a serious long-term economic plan if we are to promote such a high-pay, high-quality, high-productivity culture throughout our country, but the Budget failed lamentably on the fundamentals of productivity, skills, homes, rail and road. Ultimately, this country will never succeed and working people will certainly never succeed if we proceed on the basis of a low-waged, low-productivity economy.
What kind of country do we want? It has to be one in which our citizens are safe where they live and work, their children are protected and we are protected from terrorism. It is therefore fundamental folly for the Government, having cut 17,000 police officers, to continue down the path of cutting 17,000 more police officers. What kind of society do we want? Before the Budget, the OECD was right to warn against measures that would slow recovery and harm the poor, but that is exactly what will now happen.
Rick was a lifelong Tory and an ex-sergeant-major in the British Army, but he has joined my local Labour party. He told me, “I was a lifelong Tory, but I have joined the Labour party because I believe in both aspiration and support for the vulnerable.” He is in sharp contrast to a cunning Chancellor who gives hubris a bad name and is ambitious not so much for the country as for himself. After the last 24 hours—and the last century—now and in the future, the simple reality is that the party for the working people always was and always will be the Labour party.
Of course, the Chancellor actually announced that he was postponing achieving a surplus for a year, which he said he would achieve by 2018-19. Does the hon. Gentleman welcome that deferral?
First, may I congratulate all the Members who have made their maiden speeches today? It has been fascinating to hear what they had to say and about their constituencies, which are very different from my constituency of Luton North.
The Budget has given me a tax cut that I do not need, which has been paid for by young people, students, the poor and public sector workers. Social justice would require the opposite of that, so I do not buy the idea that the Chancellor has somehow inched towards the centre ground of politics. He is still a right winger, concerned primarily with helping and protecting the wealthy. As my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) has recorded today, the IFS calculates that 13 million UK families will lose an average of £260 a year, while those with estates of £1 million will not have to pay any inheritance tax, so we know where the Chancellor’s heart really lies.
Much more interesting than the Budget, which is a typical Tory Budget really, is the OBR’s report “Economic and fiscal outlook”, published at the same time. There are indeed myths about the economy that have to be dispelled. Britain’s economy is not healthy; indeed, the opposite is the case. Britain is a low-wage, low-investment, low-productivity economy. Indeed, the productivity of Germany and France are 25% greater than Britain’s and we are sixth in the G7, with only the ailing Japan behind us—so there are problems, and the Budget will not make much difference to that fact.
Over several decades, Britain’s manufacturing sector has shrunk drastically, and it is now far too small to sustain what we need ourselves. As a result, our trade balance, especially with the rest of the EU, is in enormous and chronic deficit. In his Budget statement, the Chancellor made very little reference to the wider macroeconomic environment—which the hon. Member for Horsham (Jeremy Quin) touched on—and that is very worrying indeed.
The Government chant their mantras about the Government deficit and public finances while private debt is surging once again. An asset price bubble continues to grow that will inevitably burst, with drastic consequences for households and the economy as a whole. One million of our people are now dependent on food banks—a number that will be dwarfed when the crash comes. I use the word “crash” because that is what we face, with inept and misguided economic policies at home and global factors again driving us towards recession. China’s economy is decelerating and is now in a share price crisis; Japan’s economic weakness continues, with no end in sight; the eurozone is a basket case; and the USA has seen a false economic dawn, with another asset price bubble driven by corrupt share buy-back schemes, among other factors.
“Demand is slowing, share prices will be devastated, and recession is coming, with downturns that will be remembered in 100 years.” Those are not my predictions but the words of Crispin Odey, one of London’s leading hedge fund managers, who tends to get his predictions right, including on the 2008 crisis. My own conclusion is simply that globalisation—neo-liberalism—does not work and that leaving the financial markets and the global corporations free to do what they like, with no effective economic borders to constrain them, has caused one disaster and another is coming.
The Government’s claimed economic success since 2010 is a mirage. After 2010, they first tried savage cuts in public spending, in theory to reduce the public finance deficit, but by 2012 they realised that this was simply driving the country into recession, so they reduced their pressure on the economic brake and tried a bit of quantitative easing. Asset prices began to rise, notably in housing, and consumer spending edged upwards, producing a modest rise in economic growth. However, we still have low productivity—a chronic disease in Britain’s economy—and we still bump along, sustained only by low wages and income from asset sales to foreigners: another version of selling the family silver, as Harold Macmillan so famously put it.
The one advantage that Britain does have is its own currency, able to flex to appropriate parities with other currencies. After the 2008 crisis, sterling depreciated against the euro by 27% and against the dollar by 31%, offering a degree of protection against the worst ravages of the crisis. But even that example has been wasted, with sterling surging against the euro from €1.02 to €1.40, increasing our export prices and decreasing import prices by over a third, and driving Britain’s ongoing and gigantic trade deficit with the rest of the EU. That deficit—over £1 billion a week—is equivalent to exporting at least 1 million jobs to the continent. Page 71 of the OBR report shows a gigantic current account deficit of some 6% of GDP—about £100 billion, or £1,600 for every person in Britain.
There are sensible alternatives to all this economic nonsense, and with much more time I would have been pleased to spell them out. In the short term, however, we must not be fooled into believing that the Government and their predecessor coalition have got things right when all the elements are present for another economic crisis. The Government are doing nothing to protect our economy from the next crisis, and they must not be allowed to escape the blame when it comes.
Before I conclude, I must again emphasise my concern about the sterling exchange rate. Some Members may remember that I raised my concerns about sterling’s over-valuation with Gordon Brown during his time as Chancellor. He responded sotto voce that it was not Government policy to target the exchange rate. In more recent times, I have raised the same issue in this Chamber with the Prime Minister and this Chancellor, with similar measured, if negative, responses. In my very last oral question before Dissolution, I again asked the same question of the now-departed Business Secretary, Vince Cable. He responded, astonishingly, by suggesting that there was no evidence that the exchange rate was a significant factor in the economy’s performance. Only a few days later, it was reported that manufacturing was suffering from the high euro exchange rate and that the economy was being sustained only by domestic consumer demand, with the main risks coming from the eurozone.
Much has been made of Britain’s greatly improved automotive sector, which I applaud. It is true that we make excellent-quality vehicles, including the Vauxhall Vivaro, made in Luton, but it remains the case that we import twice as many cars from the rest of the EU as we export to it. Had I had an opportunity to do so, I would have reminded Vince Cable of the big depreciation after 2008; the rapid recovery from the 1992 exchange rate mechanism debacle, driven by a large exchange rate reduction; and even the 1931 departure from the gold standard, which laid the foundation for the economic recovery from the inter-war depression.
An appropriate exchange rate is not a sufficient condition for economic success, but it is a vital one. Had Britain been stuck in the euro, at a parity perhaps as high as €1.50 to the pound, the economy would have been utterly wrecked, with Britain almost certainly crashing out of the euro, probably bringing down the whole euro edifice in the process.
The Government are riding for a fall if nothing is done to bring down Britain’s bloated exchange rate, and soon. Writing recently in The Guardian, Larry Elliott said that the Government were sitting on an economic time bomb. That is surely the case, and the priority must be to bring down sterling’s exchange rate with the euro. The Budget must be seen in that wider context and the Chancellor’s mind should be focused on those wider international dangers, or we will all be in trouble.
The hon. Gentleman and I should be at one, because we are addressing the facts. That is what today’s announcement was about. The hon. Gentleman mentions the number of those who are in work but who have not risen out of poverty. The figures I read out earlier show that, of those who fail to get proper maths or English qualifications at school and make it into work—they are in the minority—some 75% of the women will never progress because of their failure to get qualifications. Does not the hon. Gentleman think that I am answering his charge through educational attainment—driving change for those children and getting them into work so that they can progress?
My hon. Friend should know that in the last Parliament we put a significant amount of money into credit unions. It is our plan—we are determined about this—to get credit unions to expand and to work with them so that they become the key element for people on low incomes and others to be able to get decent support, including financial support. I recommend that all hon. Members set an example by making sure that they are members of credit unions.