Welfare Benefits Up-rating Bill

John Hemming Excerpts

Monday 21st January 2013 Commons Chamber

[Steve Webb]

Amendment 12 is simply a vacuum that could insert anything—

[John Hemming (Birmingham, Yardley) (LD)]

Will my hon. Friend give way?

[Steve Webb]

I will not for the moment, because my hon. Friend has joined our proceedings relatively recently. I should like to respond to the amendments that my hon. Friends and others have tabled, and I hope he understands that.

Amendment 7, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas) and supported by the hon. Member for Banff and Buchan (Dr Whiteford), is in fantasy land, I am afraid. It not only rejects the savings in the Bill but would add additional savings on top by linking benefits to RPI. I have to give credit to the hon. Member for Brighton, Pavilion, because she knows how ludicrously expensive her amendment is and I am grateful to her for being frank about that. In a single year, it would cost £2.6 billion more than the current plan.

--- Later in debate ---

[Steve Webb]

I am grateful to my hon. Friend for mentioning the position of low-paid workers. People on the minimum wage were mentioned in the debate, and we will have halved the tax bill of someone on the minimum wage. That is a real contribution to their standard of living.

I say to my hon. Friend the Member for St Ives that we cannot find the savings that we need by excluding the social security budget from them. The two biggest things that the Government spend money on are public sector pay, which has already been the subject of a separate measure, and social security benefits. The two together account for a vast swathe of public spending. When we need savings, we cannot ring-fence social security. What we can do, however, is try to do things gradually.

I want to explain why some of the figures for people’s losses that have been quoted are far greater than is truly the case. My hon. Friend mentioned someone who is in and out of work, and the typical time on jobseeker’s allowance is three months. My right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) asked me to give some examples of cash figures. We are talking about an uprating of perhaps 80p a week or so below inflation in one year, so maybe £2.50 a week below inflation over a three-year period. For a typical person who is out of work for three months, which is the median spell on JSA, the difference will therefore be a tenner a month, or £30 to £40 over that three-month period. That £40 is a lot of money to someone who is unemployed, but the typical experience is that someone has three months of unemployment and then finds a job. We are about to cut people’s income tax bills by £600 a year, so that person might have, say, £3 a week less while unemployed, but the typical experience is for them to be unemployed for a relatively short period and then get a job, so they will benefit from all our other measures.

[John Hemming]

Does my hon. Friend agree that the Opposition’s policy of not having a policy runs the risk of putting up the interest rate on our Government debt? We owe more than £1 trillion, and 1% more on that would be more than £10 billion extra to find through either extra cuts or extra taxes.

[Steve Webb]

My hon. Friend is quite right. There is nothing progressive about vast borrowing, because then we are asking our children and grandchildren to pay for it.

There has been much discussion about percentages during the debate. Several Members have said that a small percentage of not very much is not very much—I think their argument was that the answer was a slightly bigger percentage of not very much. However, even a small percentage of a £200 billion bill for tax credits, pensions and benefits is a vast sum of money, which is why we have to take the difficult decisions we are talking about.