Tax Credits

Jim Shannon Excerpts

Tuesday 15th September 2015 Commons Chamber

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

It is unfortunate that we have only 90 minutes to debate the regulations, but it is absolutely right that we should debate them on the Floor of the House. The right hon. Member for Birkenhead (Frank Field) has done us a great service in bringing this matter to the Floor of the House. It is worth reflecting, however, that the reason why there is not more public outrage about the proposed changes is a reflection of the sheer complexity of our tax and benefit system. That will have to be addressed—not in this way—in the medium to long term.

There was a lot in the Minister’s speech with which I could agree quite easily. When he spoke about the importance of raising the personal tax allowance, the very welcome increases to the minimum wage and the importance of providing better childcare provision, those are all things with which I could have no difficulty. The difficulty I have with the regulations is that at a stroke they negate the benefits the Minister outlined. It ought surely to be a matter of common consensus in all parts of the House that the best route out of poverty is through work, but what the Government are doing today is giving with one hand and taking away with the other.

[Jim Shannon (Strangford) (DUP)]

Will the right hon. Gentleman give way?

[Mr Carmichael]

I am sorry, but I am short of time.

The average household in social housing could lose up to £1,700 a year under the changes. That means for every extra £1 earned, they will lose up to 93p in benefits. That is why the Government are not true to their stated intent to encourage people off welfare and into work by bringing forward changes of this sort.

To understand why today’s statutory instrument is the wrong measure at the wrong time, it is worth reflecting on what happened to people’s employment circumstances after the 2008 crash. We expected steep rises in unemployment, and sure enough it went up, but not to the extent we expected, because employers kept people in work. However, their wages were frozen or reduced and those in part-time employment saw their hours cut. We can now see the light at the end of the tunnel—at last, we are seeing some wage inflation—but surely at this moment the Government should be encouraging people to take more hours, not removing the incentives to do so.

The hon. Member for Waveney (Peter Aldous) made a characteristically thoughtful contribution, and one of the most significant. He said the Government’s proposals were strategically correct. He might well be right about that, but what he said thereafter in the rest of his contribution indicated they were tactically inept. I address myself to him and other Government Members who share his concerns, because they are part of the most powerful group in the House: Government Back Benchers. The Government have a majority of 12, so it needs only six of them to vote with us to take this down and make them think again. I say to him, because I know he is a genuine man, that if he has not had his assurances and compensations before the vote, he will not get them after it.