Spending Review and Autumn Statement

Jess Phillips Excerpts

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

I thank my hon. Friend for her words of support and for the work that she has done as Chair of the Science and Technology Committee. She made exactly the same point to me in person—that as well as providing capital support for science, we had to provide resource support to make sure that the facilities were well funded and could operate throughout the year. That is why we have increased the science resource budget and made sure that it now goes up in real terms. I know that she will want to look at Paul Nurse’s report, which is about making sure that we better co-ordinate our scientific research activity across the country.

[Jess Phillips (Birmingham, Yardley) (Lab)]

I very much welcome the Chancellor’s announcement about how the tax that I pay on my sanitary products will now be spent on women’s health charities. Will any of that money be spent on domestic and sexual violence charities? Will it be better spent than the money he announced in his Budget, which provided 27p for each woman who lived in a refuge, is only being given out now, and has to be spent by the end of March, pretty much helping no one for about four months?

[Mr Osborne]

The £15 million from the tampon tax will be available to charities that support women: not just women’s health causes but domestic violence causes, where they do brilliant work. I have announced the allocation to four charities, some of which are already involved in domestic abuse prevention. Having listened to the hon. Lady over the past few months as a new Member of Parliament, I suspect that we will not agree on many things in this Parliament, but if she has some good causes that she would like to be funded by this money, I will take a very serious look at them.

Finance Bill

Jess Phillips Excerpts

Monday 26th October 2015 Commons Chamber

[Mr Jenkin]

Our problem with the EU’s VAT directives is that they are a one-way street. Once the EU has adopted powers to regulate a particular tax, that power cannot be taken back by the member states. We are then left begging the EU as to whether we can set the tax rates for which the British people vote, as opposed to setting them ourselves. It strikes me as ironic that the Scottish National party wants independence from the United Kingdom in order to do its own thing, but it is happy to go on giving up more and more power to the European Union, so it will have even less freedom and less voice than it has in the UK.

The problem is that once VAT rates on any product are set above 5%, the European Union does not allow any member state to reduce them to below 5% again. We therefore have an anomaly whereby there is a zero VAT rate on sanitary products in the Republic of Ireland because it has never charged VAT on them. Had we started from the principle of charging no VAT on sanitary products, we would be in the same position as Ireland, but because we already charged it we cannot take it away. What a mess.

[Jess Phillips (Birmingham, Yardley) (Lab)]

I wonder whether the hon. Gentleman recognises all the good things the European Union has done for women. As somebody who has had to suffer periods and pay this unfair tax, I was also afforded maternity rights that I would never have had if it had not been for some of the pressures exerted by the European Union.

[Mr Jenkin]

I certainly acknowledge that what has happened in other member states has influenced what has happened in this country, but the hon. Lady enjoys no rights in this country that we could not have afforded ourselves through our own political processes. The question of the possibility of leaving the European Union is about taking back control over those policies, not deciding them in a different way from that which she would like. Long may we continue to agree on the importance of equal rights for women in as many areas as possible—in fact, in every area that we can possibly legislate on.

--- Later in debate ---

[Mr Jenkin]

I am not going to give way again.

I congratulate the hon. Member for Dewsbury (Paula Sherriff) on tabling new clause 7. She may be a little surprised at how many Members support it, but, sadly, we have to have this debate not because it is the British Government’s policy to levy the tax, but because it is the EU’s policy to do so. That is a fundamental freedom and control that we should bring back to this House in the future.

[Jess Phillips]

I feel the need to make all sorts of declarations of interest in this debate, having used sanitary products pretty much all my life.

I wish to pay credit to a number of women who have brought this subject to the House over the years. Without women in this place, I am certain that this issue would never have been raised, although I am delighted that so many men interested in Europe are in the Chamber to talk about it. Dawn Primarolo, a working-class woman brave enough to dare to speak up in Parliament about the taboo subject of women’s periods back in the year 2000, should be commended.

Today, when such topics are far easier for us to discuss, I have already received a number of sideways glances from colleagues around the estate on speaking about the subject and there is a certain desire among Conservative Members to say the word “products” instead of tampons. I know from speaking to my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) today that, at the time, it was considered vulgar and even shameful that Ms Primarolo brought forward the subject. She was brave. Today, our brave woman prize goes to my hon. Friend the Member for Dewsbury (Paula Sherriff). Regardless of what has been said on the other side of the House, doing nothing achieves nothing.

It is completely ridiculous that women are taxed, even at a 5% rate, for a product which, in my experience, is more than essential. The fact that we still have the tax is probably down in no small part to the fact that most of the people in the House and in our sister Parliaments all across the EU do not have wombs. The reason why we must force the Government to have a conversation with our European partners is that, without force, I fear that they will be too squeamish to talk about women’s periods. But they should not be: every person in the House exists only because their mother had a period. Today, with half term, Parliament has been teeming with children—my own have been on the slides in Portcullis House—who all exist only because their mothers had periods. It is nothing to be scared of, and nor should any man or woman ever feel that we should not talk about periods.

Such a revision in taxation may seem a marginal change, but it would make a huge difference to the women in this country. Having worked in a women’s refuge, I know that the things we had to stock up on the most—because they presented a challenge to the budgets of the women in our care—were nappies, tampons and sanitary towels.

[Cat Smith (Lancaster and Fleetwood) (Lab)]

Does my hon. Friend agree that VAT is a very unequal tax and that it hits the poorest women in our communities hardest?

--- Later in debate ---

[Jess Phillips]

I totally agree. When you have no money left, having fed your kids and paid your bills, the cost of a product such as Tampax is a real issue for people.

Let me be clear: tampons and sanitary towels are essential, and everyone in the House knows it. I will not tell how I know it. I am sure there are plenty of mishaps that the women in the House could all talk about, including no doubt those that have happened even on these Benches. This tax is a tax on women and girls. I started my period when I was 10 years old, so I have paid the tax for 23 years. If the House will excuse the pun, it is a bleeding scandal.

[Mr Baker]

This problem of taxation on tampons and other sanitary products is one that, quite rightly, excites a great degree of anger and controversy, but the solution to the problem is uncontroversial. It is perfectly obvious that we are all agreed in the House that we should get rid of the tax on tampons and other sanitary products. The reason why this is a subject of interest to so many is that the House is of course prohibited from doing so by EU law.

Tax Credits

Jess Phillips Excerpts

Tuesday 20th October 2015 Commons Chamber

[Jess Phillips (Birmingham, Yardley) (Lab)]

I rise to beg Members on the Government Benches to think very hard about how they vote tonight. When I say that I am begging, I mean it. I am begging for 24,000 children in Birmingham, Yardley who will be hit by this change. By way of comparison, I did a quick search on Rightmove this lunchtime and found that from the hundreds and hundreds of homes available for sale in my constituency only four would benefit from the inheritance tax cut—just four. That means four people winning and 24,000 children losing, and the four people winning have to be dead before they win, so they are not very thankful. This is supposed to be a one nation Government. One nation? For the people in Birmingham, Yardley it looks like the people on the Government Benches are only looking after the same old people.

I feel the need to declare that my name is Jess and I relied on benefits. When I was 23, after the birth of my first baby 10 years ago, my husband and I received child tax credits. Our household income was £19,000. Without tax credits, I would never have been able to afford the childcare for my young son. The top-up meant that I could do small bits of paid and voluntary work and the tax credits helped me to go to work and begin to build a career.

I have heard all the well-rehearsed arguments from Government Members about how they are increasing wages and I welcome those increases, I really do, but in my case that would have made no difference because I was 23 and they are not offering a pay rise to anyone under 25. If the Government wish to brand the increases in minimum wage as a living wage, they must also accept that those who do not receive it cannot afford to live. That is the simple problem with that branding. So, will the Government ensure that any parent aged 25 and under is not affected by these changes, or are they willing to tell me that those families in their constituencies do not deserve to be able to live?

--- Later in debate ---

[The Chief Secretary to the Treasury (Greg Hands)]

We have had a heated debate, with a great deal of misinformation from Opposition Members. Time is very short.

There are two principal reasons for reforming tax credits. First, they no longer meet the objectives for which they were originally designed. Secondly, they are unaffordable at their present level.

[Jess Phillips]

rose—

[Greg Hands]

I will not be giving way for a while.

Tax credits were introduced to help those on the very lowest incomes—a noble aim and one that we support—but the system spiralled out of control. Spending on tax credits more than trebled in real terms under Labour. By 2010, nine in 10 families with children, including MPs, were eligible for tax credits. Even now, the figure is six in 10, and the latest reforms will bring it down to five in 10.

It is not even as if Labour’s spending worked: following the introduction of tax credits, in-work poverty rose by some 20%. Members need not take just my word for that; I am going to quote in detail Alistair Darling, who has been referred to this evening and who was one of my predecessors as Chief Secretary at a time when the modern tax credit system was being planned. He was interviewed this summer for an article in The Spectator entitled, “Alistair Darling: why I changed my mind on tax credits”. Crucially, it appeared after the summer Budget introduced by the Chancellor. The Spectator asked him:

“So your tax credits had the unintended consequence of keeping low wages down?”

“Undoubtedly,” replied Darling. The last Labour Chancellor said:

“Well, undoubtedly… I think it was a good policy when it was introduced”.

He went on:

“As Keynes famously said: when the facts change, you change your mind.”

[Greg Hands]

I can confirm that we have got down the cost per household of the budget deficit from about £6,000 per household per annum to about £3,500 per household per annum. Those sort of figures show what reforms we are introducing.

[Jess Phillips]

Will the Minister give way?

[Greg Hands]

I will not give way at the moment.

Alistair Darling went on:

“One of the unintended consequences is that we are now subsidising lower wages in a way that was never intended.”

Like us, he was not calling for the end of tax credits. He made it clear:

“That is not an argument for scrapping tax credits, it is an argument for making sure that you adjust the system. And it’s also an argument for making sure that we do our level best to drive up those levels of wages”.

We recognise that as well.

The second reason is that the deficit the Government inherited in 2010 was equivalent to about £6,000 for every household in the country. That was being added to the national debt every year. It is now down to £3,300 per annum. Then, we were borrowing £1 for every £4 we spent. We have got that down to £1 for every £10. The world was beginning to doubt our ability to pay our way.

Welfare Reform and Work Bill (Seventh sitting)

Jess Phillips Excerpts

Tuesday 13th October 2015 Public Bill Committees

[Damian Hinds]

I think I will have to move on a little.

Last year the Government spent almost £30 billion on tax credits—more than three and a half times what we spent on military personnel. That level of spending on tax credits is unfair on those who foot the bill, who are, of course, other taxpayers. That is why the Government took steps in the summer Budget to put tax credit spending on a more—[Interruption.] Does the hon. Member for Birmingham, Yardley want to intervene?

[Jess Phillips (Birmingham, Yardley) (Lab)]

Yes, I do; I just want to point out that people who are on tax credits are in work. They are taxpayers, and they are therefore paying that bill. The Minister should not pitch two sets of people against each other. He should recognise that people who get tax credits work.

[Damian Hinds]

I do not know whether the hon. Lady deliberately did not hear me say that. I did say that people who pay the tax credit uplift are other taxpayers. That is true. That is not pitching one person against another, it is just a statement of the reality, a statement of how the system works. That is why the Government took steps—[Interruption.] Does the hon. Lady want to intervene again? She keeps on speaking.

[Jess Phillips]

I am more than happy to do so. The Minister is being extremely divisive. What he actually said was that the person footing the bill was basically someone else. The Government are basically trying to make some people feel that they are being robbed for the sake of the poor. When I lived on tax credits, I worked probably about a 14-hour day. I will not have it said of people such as me and my hon. Friends that we were beholden to someone else. We were taxpayers.

[Damian Hinds]

I do not recall referring to the hon. Lady’s specific case or the case of anybody else on the Opposition Benches. Nor did I say that anybody should feel bad for supporting others, but there is a case for balance. It is just a statement of fact that, in any tax and benefits system, benefits paid to one group or person have to be paid for by others, and we have to make sure that that system is fair.

As the hon. Lady will recall, we had a great reforming Budget with a set of measures to move us from a low-wage, high-tax, high-welfare society to a lower-tax, higher-wage, less welfare-reliant society, including measures such as the national living wage, with which we seek permanently to reform the structure of the economy and the way the system works.

--- Later in debate ---

[Damian Hinds]

I am going to press on for the moment. The average number of children in families in the UK in 2012 was 1.7. The Government therefore think it is fair and proportionate to limit support through tax credits and universal credit to the payments for two children. To give families time to prepare, the change will not come into effect until April 2017. In child tax credit, the change will affect families who have a third or subsequent child born on or after 6 April 2017 only. In universal credit, the change applies to any third or subsequent children born, or joining the household, on or after 6 April 2017 and to families making a completely new claim to universal credit after that date.

[Jess Phillips]

I want some clarity on whether the measure relates to children born after that date or a new claim for a child after that date. What if my children were born in 2005 and 2010 and I do not currently need tax credits—who knows what the future will hold?—but need to claim them later? What if I need to go back on to tax credits after having a third child? Would my children count because they were born before or is it the claim that counts?

[Damian Hinds]

I believe we will have an opportunity at a subsequent stage to debate that point in detail in relation to a subsequent amendment, but I do not want to keep the hon. Lady waiting. To be clear in simple terms, the tax credit system is for new births after April 2017; universal credit is for new births and for new claims. Of course, universal credit is replacing the tax credit system. When we talk about new claims, that is with a gap of six months. It may apply to someone who has never been in that system before or in the predecessor tax credit system, or who has been out of both systems for a period of six months.

--- Later in debate ---

Major changes are proposed for families with disabled children—families that find it difficult enough to cope as it is. They do an extraordinary job as parents and, frankly, not just as parents but for the sake of society, for all of us. These children are all our children, and the additional work that those parents put in and the additional support that they provide should be acknowledged and properly supported. The Opposition will not accept any attacks on the income that is necessary for those parents just to make ends make, so that George Osborne—[Hon. Members: “The Chancellor”]—so that the Chancellor can continue to slash taxes such as inheritance tax.

[Jess Phillips]

Has my hon. Friend read the piece in this morning’s Guardian about kinship carers also being badly affected? Specifically, some people are now not being able to take on the care of disabled children who for a number of reasons cannot be looked after by their parents, because of the changes to their financial assistance.

[Emily Thornberry]

Yes, indeed. From speaking to people who have spent many years devoted to this sector and who have tried to make our safety net as good as it possibly can be in difficult times, the attacks are coming from so many different angles, at so many different levels and so fast, that for many of us it is very difficult to know where to start. The changes are fundamental and very frightening. We know that what will happen in two or three years’ time will become manifest, and it will become increasingly obvious that the poor have got much poorer and that people have got much more desperate. That will affect children, and those born now will be disproportionately affected.

I hope that at that point, the Government will finally realise that, because I do not think that many of those on the Government Benches are heartless, but they have not thought this through. The difficulty is that their policy is based entirely on rhetoric. That is clear from some of the lines in their manifesto that are now appearing in proposed legislation. Look at the Childcare Bill, which says very little more than what was in the manifesto. The difficulty is that if you do not make policy on the basis of evidence but on the basis of rhetoric—what sounds right and what you think will work well with your focus groups—that will not work when it comes to ruling the country.

This is yet another ill-thought-out cut and change to the most vulnerable and most hard-working families, to the families in the most difficulty. Imagine spending time bringing up a child with disabilities and the continued worry of that. Those families have enough worry in terms of their child’s welfare without worrying about why the Government are taking away yet more funding and making life that much more difficult.

Tax Credits (Working Families)

Jess Phillips Excerpts

Tuesday 7th July 2015 Commons Chamber

[James Cartlidge (South Suffolk) (Con)]

I am delighted finally to have the opportunity to speak on this subject because I profoundly believe that tax credits are one of the greatest policy errors in the history of the welfare state. I say that not because of the Resolution Foundation, the International Monetary Fund or any theory; I say it because of my experience in the real world running a small business.

Let me share two key experiences with the House. The first was when I set up as a mortgage broker in 2004. We focused on the shared ownership sector, so most of our applicants were on lower and middle incomes. I was distinctly surprised when I found that people could take out mortgages based on tax credits. It its wisdom the Financial Services Authority decided that that was suitable, and I would be interested to know whether there are any Treasury figures on the amount of credit—both secured and unsecured—that was taken out on the basis of tax credits, using other people’s money to borrow other people’s money, and reinforcing the double dependency at the core of the tax credit system.

In my experience, the most serious issue with tax credits was when we started to recruit staff. In 2009, we embarked on our first round of pay rises after the great recession—Labour Members will be familiar with that—and I found it extraordinary when I received emails from staff declining those pay rises. Why did people not want a pay rise? One would expect anybody to want one—we all would; we want to get on in life. People rejected those pay rises because they would lose too much in tax credits, and that is the fundamental flaw in the tax credit system. I found that with various members of staff and parents at our school: people were in a dilemma about whether they should press on in life and try to earn more, even though they would lose money from tax credits and other benefits. I think that the tax credit policy is such a profound error because at a time of general prosperity we should not be seeking massively to expand the benefit system.

Let us consider our three core economic challenges. The first is the productivity puzzle, but it is no puzzle to me that people do not become more productive or work harder when there is no incentive for them to do so. Secondly, why is it a surprise that we have flat wage growth when there is such a disincentive for millions of workers to earn more? Thirdly, and most importantly, we have a real problem with social mobility, which is frozen. Everybody talks about that problem, but why would someone try to get on in life and be socially mobile if the massively expanded benefit system does not reward them for doing so? That is fundamental. To me, the essence of the tax credit system is that we are spending £30 billion a year to put a cap on the wages of British people and a ceiling on ambition and aspiration.

[Jess Phillips (Birmingham, Yardley) (Lab)]

I would like the hon. Gentleman to recognise that quite a lot of Opposition Members lived on tax credits and it is insulting to say that we have no ambition. I am sure he will recognise that we do.

[James Cartlidge]

I am delighted that the hon. Lady has searing ambition, and I am sure that when she achieves her full ambition she will want to reform welfare and ensure that people make the most of themselves. Tax credits are a massive barrier—that is a fact even if no Labour Member will recognise it—and we are spending £30 billion a year to put a ceiling on the aspiration and ambition of British working families. My hon. Friends and I believe in a safety net, but I do not believe in a ceiling. We should not put ceilings on ambition and hold people back from making the most of their natural talents and abilities. We should empower them to make the most of their skills.