Draft Tax Credits, Child Benefit and Guardian’s Allowance Up-rating Regulations 2020

Jesse Norman Excerpts

Monday 9th March 2020 General Committees

[The Financial Secretary to the Treasury (Jesse Norman)]

I beg to move,

That the Committee has considered the draft Tax Credits, Child Benefit and Guardian’s Allowance Up-Rating Regulations 2020.

As hon. Members will know, the Government are committed to delivering a fair welfare system for claimants and taxpayers while providing a strong safety net for those who need it the most. The regulations will ensure that tax credits, child benefit and guardian’s allowance will increase in line with the consumer price index, which set inflation at 1.7% in the year to September 2019.

The effect is to meet the Government’s manifesto commitment to end the benefits freeze, with most elements and thresholds of tax credits and both rates of child benefit being increased. The Government will spend an additional £800 million to support tax credit, child benefit and guardian’s allowance claimants. The proposed legislation increases the rates of those benefits in line with prices. I hope hon. Members will join me in supporting the regulations.

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[Jesse Norman]

I am very grateful to the hon. Member for Inverclyde and of course I understand the concerns that he has placed on the record. They do not bear directly on this uprating, which I think he will support, but he has made his position clear and it is well understood.

May I focus on the more substantive comments made by the hon. Member for Stalybridge and Hyde? He suggested that the original benefits freeze was politically motivated. Nothing could be further from the truth. The fact is that the economy had a very long period of recovery—I am pleased to say that it has recovered under this Government and their predecessors—and the view was taken that the whole of Government spending ought to be constrained. The reason for that was that between 1997 and 2010 welfare spending had risen by 65%—£84 billion in real terms—and unfortunately, combined with the mishandling of the financial sector that caused the damage from the crisis, when it took place, to be so bad, it cast a very long and quite painful shadow.

The hon. Gentleman mentioned food banks, but may I offer two or three reminders? One is that poverty, as I am sure he would agree—he is a very thoughtful man—is a complex issue. It is not just a matter of income; it is also a matter of costs, such as fuel costs and housing costs, and of childcare. The approach that the Government have taken in many cases is to pinpoint specific concerns—childcare being an obvious example. I am pleased to see that work is being done to assess whether the correct measure of poverty has been adopted, because there is a question not just about the level but about the composition. The Government are looking quite closely at that.

On food banks, let me simply point out that Germany, which on many accounts we would regard as having not merely a much richer Exchequer and more robust economic growth over the last few years—although not at the moment—than this country, and which has a more generous benefits system, has an escalating food bank problem that is every bit as bad as the one that we find in this country.

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

Will the right hon. Gentleman give way?

[Jesse Norman]

Of course.

[The Chair]

Order. Although food banks are obviously related to poverty, I remind all hon. Members of the narrowness of the instrument we are debating. I do not want us all to be tempted into a very worthy, but probably lengthy beyond the time allocated to us, debate on poverty and the definition of it. Can we keep to the narrow confines of the regulations, please?

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[Jesse Norman]

Thank you, Mr Pritchard. I am delighted to give way to the hon. Lady, who I know has views on these issues.

[Jess Phillips]

I do not know whether I have to declare an interest as somebody who, in the era that we are talking about, lived on tax credits. With regard to the Minister’s assertions about Germany as a comparator, does he think that the people who come to my office every single day to ask for food bank vouchers would get much comfort from hearing, “It’s worse in Germany”?

[Jesse Norman]

Of course not, but the point that I was making was that there is no simple link between income, poverty and food bank usage, and Germany is the example that gives the lie to that claim.

As for an assessment, legislation is of course given an impact assessment when it is introduced, and that is the case here as elsewhere. I remind the hon. Member for Stalybridge and Hyde that more than 700,000—I think it is 730,000—fewer children are living in workless households than were in 2010, and that there are more than 1 million fewer people in workless households overall? The Government’s focus on employment and the benefits of employment has delivered that achievement, which is a very important improvement not merely to economic wellbeing, but to people’s social and emotional wellbeing.

Question put and agreed to.