Tax Credits (Working Families)

Jim Shannon Excerpts

Tuesday 7th July 2015 Commons Chamber

[Mr Gauke]

I do not accept that argument. On the question of the fear of further crises and so on, we need to ensure that the public finances are on a sound footing, recognising that there will be times at which there will be turbulence in the economy. This is one of the differences we had at the general election. The Government recognise that we have to be serious about getting debt down, which is why we believe that there should be a surplus in normal years. If the Opposition are coming to that view, I welcome it, but their refusal to consider a role for the welfare budget in making a contribution towards reducing the deficit suggests that their heart is not in it.

[Jim Shannon (Strangford) (DUP)]

In 1998, tax credits were introduced for two reasons—low wages and the high cost of living. They enabled the proportion of children in poverty to be reduced from 35% to 19%. Barnardo’s in Northern Ireland has expressed concerns about welfare reforms, particularly to tax credits. It says that 160,000 families will find themselves in child poverty as a result. How would the Minister answer that and reassure Barnardo’s and me as an elected representative that that will not happen?

[Mr Gauke]

We need a fair and sustainable welfare system. Five years ago we inherited a welfare system that was not working for people throughout our country. Those who worked hard found more and more of their earnings being taken away to support a welfare system that was dangerously out of control. On tax credits alone, in 2010-11, nominal spending had increased by an extraordinary 180% compared with the benefits they replaced. Worse, the benefits system as it stood created the most perverse incentive of all: for some people it made financial sense to choose to live on benefits rather than earn a living. It rewarded doing the wrong thing, punished doing the right thing, alienated millions of hard-working people and let down millions more. It was financially and morally unsustainable.